Global| Nov 08 2010U.S. Consumer Credit Increase Is Only Second Of Year
by:Tom Moeller
|in:Economy in Brief
Summary
There's been a conscious effort by consumers to reduce debt levels this year. And despite Friday's report, it's ongoing. The Federal Reserve indicated that consumer credit outstanding rose $2.1B during September following declines [...]
There's been a conscious effort by consumers to reduce debt levels this
year. And despite Friday's report, it's ongoing. The Federal Reserve indicated
that consumer credit outstanding rose $2.1B during September following declines
during the prior seven months. The August decline was revised deeper. So far
this year, consumer credit, which does not included mortgage debt, has fallen
1.4% on the heels of last year's record 4.4% drop.
Peculiar about the September figure was a $10.4B increase in non-revolving credit outstanding. It was by far the largest increase since January and, like then, it resulted mostly from a spike in borrowing by the Federal government. It's up by three quarters y/y. Other revolving credit (autos & other consumer durables), which accounts for nearly two-thirds of the total was restrained. Commercial bank lending fell hard m/m but was up 4.5% y/y while finance company credit was off $3.4B (-4.7% y/y). Credit union credit fell $1.3B (-8.0% y/y) while nonfinancial business borrowing slipped $0.4B (-0.9% y/y). Pools of securitized assets slipped but were off by half from last year.
Revolving credit is what consumers still are in a hurry to shed. Outstanding balances fell $8.3B during September and by 8.9% y/y which remained near the -10.2% record set in January. (Prior to 2009, revolving credit had never been negative y/y.) Pools of securitized assets slipped marginally from August but they're off 89.1% y/y. Commercial bank credit fell $8.5B m/m but remained up nearly three quarters from 2009. Finance company lending again held roughly constant m/m (+42.5% y/y) while credit union borrowing also was roughly stable (+3.2% y/y) as was savings institutions credit (+21.2% y/y).
During the last ten years, there has been a 60% correlation between the y/y change in credit outstanding and the change in personal consumption expenditures. These figures are the major input to the Fed's quarterly Flow of Funds accounts for the household sector.Credit data are available in Haver's USECON database. The Flow of Funds data are in Haver's FFUNDS database.
| Consumer Credit
Outstanding (m/m Chg, SAAR) |
Sept. | Aug. | July | Y/Y | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| Total | $2.1B | $-4.9B | $-5.4B | -2.9% | -4.4% | 1.5% | 5.7% |
| Revolving | -8.3 | -5.0 | -5.0 | -8.9 | -9.6 | 1.6 | 8.1 |
| Non-revolving | 10.4 | 0.1 | -0.4 | 0.5 | -1.3 | 1.5 | 4.4 |
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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