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Economy in Brief

Faster Than Expected U.S. Consumer Credit Growth in August
by Winnie Tapasanun  October 7, 2022

• Consumer credit growth $32.2 bil. in August, accelerating from $26.1 bil. in July and 18.2 bil. last August.

• Revolving credit usage strengthens.

• Nonrevolving credit growth remains firm.

Consumer credit outstanding rose $32.2 billion (8.0% y/y) in August after a $26.1 billion July increase (revised from $23.8 billion). A $25.0 billion rise had been expected in the Action Economics Forecast Survey. The ratio of consumer credit outstanding to disposable personal income edged up to 25.1% in August, the highest since March 2020, from 25.0% in July.

Revolving consumer credit balances increased $17.2 billion (15.3% y/y) in August following a $10.9 billion July rise (unrevised). Revolving credit provided by depository institutions (91.0% of the total and mostly credit card debt) advanced 17.0% y/y, the quickest growth since November 1996, up from July's 15.9% y/y. Borrowing from credit unions (6.2% of the total) increased 13.3% y/y, the same pace as in July. Nonfinancial business loans (1.7% of the total) were unchanged in August from a year ago. The value of finance company loans (1.1% of loans) fell 19.2% y/y in August, compared to drops of 20.1% y/y in July and 13.3% y/y last August.

Nonrevolving consumer credit balances rose $15.1 billion (5.9% y/y) in August after rising by the same amount in July (revised from $12.9 billion). Federal government lending, which issued 41.6% of nonrevolving credit, rose 3.1% y/y, the same rate as in July, June and May. Nonrevolving loans provided by depository institutions (26.4% of credit) grew 8.5% y/y, the lowest since October 2021, down from July's 8.8% y/y. Finance company lending (15.9% of loans) rose 0.8% y/y, marginally up from July's 0.6% y/y but noticeably down from 6.0% y/y last August and an 8.7% y/y peak in April 2021. Growth of credit union nonrevolving loans (15.0% of the total) accelerated to 16.4% y/y in August, the fastest pace since December 2015, from 15.9% y/y in July.

The value of student loans outstanding eased 0.1% q/q (+1.5% y/y) to $1.745 trillion in Q2'22 after a 0.8% rebound to $1.747 trillion in Q1. The value of motor vehicle loans outstanding rose 2.6% q/q (7.2% y/y) to $1.367 trillion, the nineth straight quarterly rise, after a 1.4% Q1 increase to $1.332 trillion.

These Federal Reserve Board figures are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of the Census and Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver's USECON database. The Action Economics figures are contained in the AS1REPNA database.

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