U.S. Consumer Credit Growth Is Surprisingly Weak in December
by:Tom Moeller
|in:Economy in Brief
Summary
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Nonrevolving credit growth is smallest since 2020.
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Revolving credit usage slows sharply.
Consumer credit grew by $11.6 billion (7.8% y/y) during December after increasing $33.1 billion in November, revised from $28.0 billion. It was the weakest increase since January 2021, down from a $45.6 billion increase in March of last year. A $25.0 billion gain had been expected in the Action Economics Forecast Survey. The ratio of consumer credit outstanding to disposable personal income held steady at 25.2% and remained close to the highest level since March 2020.
Nonrevolving consumer credit balances edged $4.4 billion higher (5.6% y/y) in December after increasing $17.8 billion in November, revised from $11.5 billion. It was the weakest increase since August 2020, down from a high of $24.1 billion in June 2022. Federal government lending, which issues 41.4% of nonrevolving credit, rose 3.1% y/y. Nonrevolving loans provided by depository institutions (26.3% of credit) grew 6.3% y/y, easing from 10.5% in April. Finance company lending (15.9% of loans) edged 0.9% higher y/y after increasing 8.7% y/y as of April 2021. Growth of credit union nonrevolving loans (15.5% of the total) rose an accelerated 18.8% y/y in December.
Revolving consumer credit increased $7.2 in December (14.8% y/y) following a $15.3 billion November increase, revised from $16.5 billion. It was the smallest rise since August 2021, down from $25.9 billion nine months earlier. Revolving credit provided by depository institutions (91.0% of the total and mostly credit card debt) rose 15.3% y/y. Borrowing from credit unions (6.3% of the total) increased 16.9% y/y, the quickest increase since December 1995 and up from 3.8% y/y growth in 2021. Nonfinancial business loans (1.7% of the total) held steady y/y in December. The value of finance company loans (1.0% of loans) fell 9.3% y/y in December.
The value of motor vehicle loans outstanding increased 7.7% y/y in the fourth quarter of 2022, up from 3.4% in 2020. The value of student loans outstanding rose 1.4% y/y, down from a high of 14.7% in 2008.
These Federal Reserve Board figures are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of the Census and Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver's USECON database. The Action Economics figures are contained in the AS1REPNA database.
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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