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Consumer Credit: Another Uptick in July

September 8, 2016

Bottom Line: Consumer credit continued to increase by a double-digit amount in July, as it has for all of 2016. However, the year-over-year rate of growth has slowed. While not enough to turn the trend, July saw a reversal in the trend of accelerating revolving loan growth (mainly credit cards) and decelerating non-revolving (mostly autos in July). Student loan growth, usually a large portion of non-revolving loans, was low - as it is typical in July. The consumer debt-to-disposable income ratio (ex-student loans) had declined from a peak of 23.4% in April 2004 to a trough of 17.7% in December 2012 as households deleveraged. The current reading is modestly higher at 18.9%.

Consumer Credit ROSE by $17.7 billion in July, compared with market expectations for an increase of $16.0 billion. Additionally, the prior month was revised slightly higher from $12.3 billion to $14.5 billion. Over the past year, consumer credit has increased by $208.0 billion or 6.0%.

Revolving Credit, including credit cards, ROSE by $2.8 billion. Over the past year, revolving credit has increased by $54.3 billion or 5.9%. Revolving debt is now close to its July 2009 levels but still 5.1% below its July 2008 peak.

Non-Revolving Credit, including auto and education loans, ROSE by $14.9 billion. Over the past year, non-revolving credit has increased by $153.7 billion or 6.1%. Of this amount, $101.6 billion, or 66.1%, appears to be due to increases in student loans held by the federal government. Non-revolving debt had been climbing fairly rapidly since mid-2010 but is now increasing only moderately over the past year.

Article by contingentmacro