Global| Feb 08 2005Consumer Credit Usage Moderate, Total Liabilities Strong
by:Tom Moeller
|in:Economy in Brief
Summary
Consumer credit outstanding rose $3.1B in December to finish out a year of 4.6% growth, about the same as during the prior two years. Growth in consumer credit has remained well below the double digit peaks of several years ago as [...]
Consumer credit outstanding rose $3.1B in December to finish out a year of 4.6% growth, about the same as during the prior two years. Growth in consumer credit has remained well below the double digit peaks of several years ago as individuals shifted borrowing to lower interest rate, home equity lines of credit.
In December, revolving credit outstanding rose $0.9B (4.2% y/y) and usage of nonrevolving credit rose $2.2B (4.8% y/y).Total consumer credit accounts for just 15% of total credit owed by individuals.
According to the Federal Reserve's broader Flow of Funds Accounts, total credit owed by individuals surged 8.9% y/y through 3Q04. Mortgage debt on nonfarm homes rose 11.7% y/y (55% of individuals' total liabilities) and also by 6.1% growth in mortgage debt excluding homes (12% of individuals' total). "Other liabilities" rose 8.2% y/y and are 16% of individuals' liabilities.
The ratio of individuals' financial assets ($31 trillion) to liabilities ($14 trillion) was 2.22 in 3Q versus 2.33 in 2003 and a peak of 3.37 in 1999. For the last five years, assets grew 2.1% annual rate while liabilities surged at a 9.1% rate.
| Consumer Credit Outstanding | Dec | Nov | Y/Y | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| Total | $3.1B | $2.0B | 4.6% | 4.6% | 4.5% | 4.5% |
| Revolving | $0.9B | $0.6B | 4.2% | 4.2% | 2.8% | 2.2% |
| Nonrevolving | $2.2B | $1.4B | 4.8% | 4.8% | 5.6% | 5.9% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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