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Consumer Credit: Slower Growth

July 10, 2017
Bottom Line: Consumer credit rebounded sharply more than expected in May as revolving credit, primarily credit cards, rose from unusually low levels in April. With the revisions and this rebound, the 3-month average growth rate is back to being slightly above the 6-month average pace, a potential improvement in trend. And while the 3- and 6-month averages are above the average monthly pace of 2016, they are still below the 12-month average. Overall the trend points toward a modest deceleration in credit growth, though that deceleration no longer appears as sharp as it did in March and April.

Consumer Credit ROSE by $18.4 billion in May, compared with market expectations for an increase of $13.5 billion. Additionally, the prior month was revised slightly higher from $8.1 billion to $12.9 billion. Over the past year, consumer credit has increased by $209.6 billion or 5.8%.

Revolving Credit, including credit cards, ROSE by $7.4 billion. Over the past year, revolving credit has increased by $58.2 billion or 6.1%. Revolving debt is now close to its 2006-2007 levels but still 0.2% below its July 2008 peak.

Non-Revolving Credit, including auto and education loans, ROSE by $11.1 billion. Over the past year, non-revolving credit has increased by $151.3 billion or 5.7%. Of this amount, $95.5 billion, or 63.1%, appears to be due to increases in student loans held by the federal government.