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Economy in Brief

U.S. Consumer Credit Extension Rebounds M/M And Trend Firms
by Tom Moeller  November 7, 2011

Consumers rediscovered an interest in using credit for purchases during September. The Federal Reserve reported that overall consumer credit expanded $7.4B following a little-revised $9.7B drop during August, initially reported as -$9.5B. A $5.4B increase had been expected by Action Economics. Credit has risen 2.4% during the last twelve months following the 1.7% decline during 2010.

Non-revolving credit, which accounts for nearly two-thirds of the total, rose $8.0B and recovered all of its August drop. Moreover, the 4.7% y/y change builds on the 1.5% increase last year. Loans by the Federal government rose slightly less than one-half y/y but finance company lending fell 3.8% y/y. Commercial bank credit also fell 3.5% y/y and saving institutions lending ticked up 1.9% y/y. Nonfinancial business credit rose by 1.4% y/y while pools of securitized assts fell 16.4% y/y.

Consumers revolving credit balances slipped by $0.6B during September and that left the y/y decline at 2.0%. Prior to 2009, revolving credit usage had never been negative y/y. Pools of securitized assets dropped 14.0% y/y and commercial bank credit fell 3.3% y/y. Meanwhile, finance company credit rose 6.8% y/y while savings institution credit jumped 10.8% y/y. Credit union lending rose a stable and slower 2.8% y/y but nonfinancial business credit remained unchanged.

During the last ten years, there has been a 53% correlation between the y/y change in credit outstanding and the change in personal consumption expenditures, although the correlation recently has weakened considerably. The credit figures are the major input to the Fed's quarterly Flow of Funds accounts for the household sector.

The consumer credit data are available in Haver's USECON database. The Action Economics figures are in the AS1REPNA database.

The October 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve Board is available here.

Consumer Credit Outstanding
(M/M Chg, SAAR)
Sep Aug Jul Y/Y 2010 2009 2008
Total $7.4B $-9.7B $11.8B 2.4% -1.7% -4.4% 1.5%
  Revolving -0.6 -2.3 -3.4 -2.0 -7.5 -9.6 1.7
  Non-revolving 8.0 -7.4 15.2 4.7 1.5 -1.3 1.5
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