Global| Aug 08 2011U.S. Consumer Credit Extension Jumps
by:Tom Moeller
|in:Economy in Brief
Summary
Consumers seem more secure about taking on debt. Reported late Friday, overall consumer credit surged $15.5B during June following an unrevised $5.1B May increase. A $5.1B increase had been expected by Action Economics. Credit has [...]
Consumers seem more secure about taking on debt. Reported late Friday, overall consumer credit surged $15.5B during June following an unrevised $5.1B May increase. A $5.1B increase had been expected by Action Economics. Credit has risen during the last nine months at a 2.9% annual rate (1.7% y/y) and has reversed last year's decline.
Non-revolving credit, which accounts for nearly two-thirds of the total, surged. The $10.3B June increase nearly matched the jump during February and pulled the y/y change to 4.3%, its strongest since April, 2008. Loans by the Federal government rose by two-thirds y/y but finance company lending dropped 6.5%. Commercial bank credit also fell 5.1% y/y while saving institutions lending was off 1.3%. Nonfinancial business credit inched up 0.7% but pools of securitized assts fell 17.6%.
Consumers also raised revolving credit balances during June. The $5.2B advance was the second gain since December and lessened the y/y decline to 3.4%. Prior to 2009, revolving credit usage had never been negative y/y. Pools of securitized assets dropped 14.8% y/y and commercial bank credit fell 5.2%. Meanwhile, finance company credit rose 6.4% y/y while savings institution credit jumped 15.5%. Credit union lending rose a diminished 2.6% y/y and 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.
Sustainable Social Security: Four Options from the Federal Reserve Bank of New York can be found here.
| Consumer Credit
Outstanding (M/M Chg, SAAR) |
Jun | May | Apr | Y/Y | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Total | $15.5B | $5.1B | $5.6B | 1.7% | -1.7% | -4.4% | 1.5% |
| Revolving | 5.2 | 3.3 | -0.8 | -3.4 | -7.5 | -9.6 | 1.7 |
| Non-revolving | 10.3 | 1.7 | 6.6 | 4.3 | 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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