Global| May 09 2011U.S. Consumer Credit Usage Strengthens
by:Tom Moeller
|in:Economy in Brief
Summary
The recent recovery in consumer spending has been accompanied by a combination of strengthened use of non-revolving credit and less use of revolving usage. Reported Friday, overall consumer credit rose $6.0B during March following a [...]
The recent recovery in consumer spending has been accompanied by a
combination of strengthened use of non-revolving credit and less use of
revolving usage. Reported Friday, overall consumer credit rose $6.0B
during March following a little-revised February gain of $7.6B. A $5.0B
increase has been expected by Action Economics. Credit has risen strongly
during the last six months following declines from 2008 and into 2010.
Non-revolving credit, which accounts for nearly two-thirds of the total, rose for the eighth straight month. The $4.1B increase pulled the y/y change to 2.8% following a 1.5% increase last year. Loans by the Federal government rose 69.3% y/y but finance company lending fell 6.4%. Commercial bank credit fell 7.7% y/y while saving institutions credit was unchanged. Nonfinancial business credit fell 1.1% and pools of securitized assts fell 20.2%.
Consumers took a break from paying down their revolving credit outstanding balances for only the second month since September 2008. It rose $1.9B during March but was still down 5.2% y/y. Prior to 2009, revolving credit usage had never been negative y/y. Pools of securitized assets dropped 13.0% y/y and commercial bank credit fell 8.0%. Finance company credit rose 5.3% and savings institution credit rose by nearly one-quarter. Credit union credit rose 2.9% and nonfinancial business credit remained unchanged.
During the last ten years, there has been a 52% correlation between the y/y change in credit outstanding and the change in personal consumption expenditures, although the correlation recently has weakened considerably. These 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.
Reaping the Full Benefits of Financial Openness is Friday's speech by Fed Vice Chair Janet L. Yellen and it can be found here.
| Consumer Credit
Outstanding (M/M Chg, SAAR) |
Mar | Feb | Jan | Y/Y | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Total | $6.0B | $7.6B | $4.4B | 0.0% | -1.7% | -4.4% | 1.5% |
| Revolving | 1.9 | -2.6 | -3.9 | -5.2 | -7.5 | -9.6 | 1.7 |
| Non-revolving | 4.1 | 10.1 | 8.3 | 2.8 | 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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