Consumer Credit: Cars, Cards and College

June 7, 2016
Bottom Line: Consumer credit increased by $14.4B, moderately below market expectations. The year-over-year rate of growth, though, fell only slightly to 6.2%. Revolving debt increased for the 5th time in the last 6 months and has risen moderately over the past year. Meanwhile, non-revolving debt rose sharply with about one-third of this increase being student loans. 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 $13.4 billion in April, compared with market expectations for an increase of $18.0 billion. Additionally, the prior month was revised lower from $29.7 billion to $28.4 billion. Over the past year, consumer credit has increased by $211.3 billion or 6.2%. Revolving Credit, including credit cards, ROSE by $1.7 billion. Over the past year, revolving credit has increased by $49.4 billion or 5.5%. Revolving debt is now close to its August 2009 levels but still 6.8% below its July 2008 peak. Non-Revolving Credit, including auto and education loans, ROSE by $11.7 billion. Over the past year, non-revolving credit has increased by $161.9 billion or 6.5%. Of this amount, $99.6 billion, or 61.5%, 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 moderately over the past year.
Article by contingentmacro