Consumer Credit Rose in October
Total consumer credit outstanding rose $86.7 billion at an annual rate in October, a 2.1 percent increase from the prior month. From a year ago, total consumer credit is up just 0.3 percent (see chart), well below the 25-year annualized pace of 5.4 percent and the slowest pace since November 2010.
Revolving credit outstanding fell at a $65.6 billion annual rate in October (see chart), or 6.7 percent from the prior month. Total revolving credit outstanding was $979.6 billion or about 24 percent of total consumer credit.
The drop in revolving credit (primarily credit cards) was not enough to offset the $152.3 billion (see chart), or 4.8 percent, increase in nonrevolving credit. Total nonrevolving credit outstanding rose to $3,184.6 billion (about 76 percent of total consumer credit) from $3,171.9 billion in September.
As of the end of September, nonrevolving credit consisted mostly of student loans, totaling $1,704.9 billion, or 53.4 percent, and auto loans, totaling $1,219.0 billion, or 38.2 percent. Together, they account for 91.6 percent of nonrevolving debt outstanding.
Total consumer-credit growth was very slow in October by historical comparison and driven by a drop in revolving credit outstanding. Modest credit growth along with very low debt service measures and record high household net worth as of the second quarter are positive signs. Third-quarter data on household credit and net worth are due out on December 10.
Robert Hughes
Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.
