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Economy in Brief

U.S. Consumer Credit Outstanding Increases Again
by Tom Moeller December 7, 2011

Consumers are using credit to enhance their buying power. The Federal Reserve reported that overall consumer credit expanded $7.7B in October following a revised $6.8B increase during September, initially reported as $7.4B. A $7.0B increase had been expected by Action Economics. Credit outstanding 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 $7.3B, up slightly versus during September. Loans by the Federal government rose by roughly one-third y/y and finance company lending gained 0.7% y/y. Loans by nonfinancial business increased 1.6% and loans by savings institutions rose 0.5% y/y. Pools of securitized assets fell 12.6% y/y, commercial bank credit decreased 3.7% y/y and credit union lending was off 1.9% y/y.

Consumers revolving credit balances gained a minimal $0.3B during October leaving the y/y decline at 1.1%. Prior to 2009, revolving credit usage had never been negative y/y. Pools of securitized assets dropped 12.3% y/y and commercial bank credit fell 2.6% y/y. Meanwhile, savings institution credit jumped 13.7% y/y while finance company credit rose 6.7% y/y. Credit union lending rose a slower 2.5% y/y while 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.

Consumer Credit Outstanding
(M/M Chg, SAAR)
Oct Sep Aug Y/Y 2010 2009 2008
Total $7.7B $6.8B $-10.5B 2.4% -1.7% -4.4% 1.5%
  Revolving 0.3 0.4 -1.6 -1.1 -7.5 -9.6 1.7
  Non-revolving 7.3 6.5 -8.9 4.2 1.5 -1.3 1.5
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