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Consumer Credit: More Credit Card Weakness

March 7, 2017
Bottom Line: After only small growth in revolving credit balances in December, consumers on net paid down revolving credit, mostly credit cards, in January. With growth in total consumer credit (excluding home equity and mortgage loans) steady at 6-7% annually for the last three years, the trend had been towards decelerating non-revolving credit, mostly student loans, and accelerating growth in revolving credit. However, the last two months suggest the trend in revolving credit may be stalling, while the deceleration in non-revolving credit continues, suggesting slower total consumer credit growth.

Consumer Credit ROSE by $8.8 billion in January, compared with market expectations for an increase of $17.3 billion. However, the prior month was revised slightly higher from $14.2 billion to $14.8 billion. Over the past year, consumer credit has increased by $223.5 billion or 6.3%.
Revolving Credit, including credit cards, FELL by $3.8 billion. Over the past year, revolving credit has increased by $56.6 billion or 6.0%. Revolving debt is now close to its 2006-2007 levels but still 2.5% below its July 2008 peak.

Non-Revolving Credit, including auto and education loans, ROSE by $12.6 billion. Over the past year, non-revolving credit has increased by $166.8 billion or 6.4%. Of this amount, $99.5 billion, or 59.6%, 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 modestly over the past year.