Global| Jul 11 2011U.S. Consumer Credit Expansion Led By Credit Cards
by:Tom Moeller
|in:Economy in Brief
Summary
Consumers seem to have retrieved their credit cards, earlier stowed in the dresser drawer. Reported late Friday, overall consumer credit rose $5.1B during May following a $5.7B April advance, revised down from $6.3B reported last [...]
Consumers seem to have retrieved their credit cards, earlier stowed in
the dresser drawer. Reported late Friday, overall consumer credit rose
$5.1B during May following a $5.7B April advance, revised down from $6.3B
reported last month. A $5.0B increase was expected by Action Economics.
Following earlier declines, credit has risen during the last eight months
at a 2.3% annual rate (1.0% y/y).
Consumers stopped paying down their revolving credit balances during May. The $3.3B advance was the first gain since December and lessened the y/y decline to 4.4%. Prior to 2009, revolving credit usage had never been negative y/y. Pools of securitized assets dropped 15.6% y/y and commercial bank credit fell 4.4%. Meanwhile, finance company credit rose 5.8% y/y while savings institution credit jumped 16.0%. Credit union lending rose a diminished 2.3% y/y and nonfinancial business credit remained unchanged.
Non-revolving credit, which accounts for nearly two-thirds of the total, rose for the tenth straight month. The weakened $1.8B May increase pulled the y/y change to 3.8%, its strongest since June, 2008. Loans by the Federal government rose by more than two-thirds y/y but finance company lending dropped 7.1%. Commercial bank credit fell 5.8% y/y while saving institutions lending was off 1.1%. Nonfinancial business credit remained unchanged but pools of securitized assts fell 19.3%.
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.
Upstream Capital Flows: Why Emerging Markets Send Savings To Advanced Economies from the Federal Reserve Bank of Dallas is available here.
| Consumer Credit
Outstanding (M/M Chg, SAAR) |
May | Apr | Mar | Y/Y | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Total | $5.1B | $5.7B | $4.3B | 1.0% | -1.7% | -4.4% | 1.5% |
| Revolving | 3.3 | -0.8 | -0.4 | -4.4 | -7.5 | -9.6 | 1.7 |
| Non-revolving | 1.8 | 6.5 | 4.7 | 3.8 | 1.5 | -1.3 | 1.5 |
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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