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Economy in Brief

U.S. Consumer Credit Outstanding Surges
by Tom Moeller  January 10, 2012

Consumers felt confident enough during November to significantly strengthen their usage of credit. The Federal Reserve reported that overall consumer credit surged $20.4B after a revised $6.0B gain during October, initially reported as $7.7B. A $7.0B increase had been expected by Action Economics. This latest gain in credit was the strongest since November, 2001. It raised usage 3.2% during the last twelve months following the 1.7% decline during 2010.

Non-revolving credit, which accounts for nearly two-thirds of the total, surged $14.8B, the most since 2001. Loans by the Federal government rose by roughly one-third y/y. Loans by nonfinancial business increased 1.8% y/y while finance company lending gained 1.5% y/y. Loans by savings institutions inched up 0.8% y/y. To the downside, pools of securitized assets fell 12.1% y/y, commercial bank credit decreased 3.6% y/y and credit union lending was off 1.9% y/y.

Consumers revolving credit balances gained $5.6B during November leaving y/y usage unchanged. Credit issuance by savings institutions led the gain over the last year and rose 11.6%. Finance company credit rose 8.2% y/y while savings institution credit jumped 3.6% y/y. Credit union lending increased a moderate 3.6% y/y while nonfinancial business credit remained unchanged. Pools of securitized assets decreased 9.0% y/y and commercial bank credit fell 1.4% y/y.

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.

What Your Credit Report Says About You from the Federal Reserve Bank of Philadelphia is available here.

Consumer Credit Outstanding
(M/M Chg, SAAR)
Nov Oct Sep Y/Y 2010 2009 2008
Total $20.4B $6.0B $7.5B 3.2% -1.7% -4.4% 1.5%
  Revolving 5.6 0.7 0.4 0.0 -7.5 -9.6 1.7
  Non-revolving 14.8 5.3 7.1 4.7 1.5 -1.3 1.5
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