Consumer Credit: Credit Card Spending Drops Sharply

Bottom Line: Consumer credit showed a surprising decline in March as the shutdowns for the novel coronavirus began. Revolving credit fell $28B, the most in the history of this report. Non-revolving debt rose as student loan growth more than offset declines in auto loans. The decline in revolving credit, mostly credit cards, was a big surprise, suggesting consumption in March was even weaker than feared. We can speculate that intermediate consumers, like restaurants purchasing supplies, may have accounted for a larger share of credit card usage than we knew. We would expect a modest rebound in April revolving credit and a large jump in non-revolving as many businesses received loans from the government's Paycheck Protection Program. Consumer Credit FELL by $12.0 billion in March, compared with market expectations for an increase of $15.0 billion. Additionally, the prior two months were revised lower by $4.2 billion. Over the past year, consumer credit has increased by $153.0 billion or 3.8%. Revolving Credit, including credit cards, FELL by $28.2 billion. Over the past year, revolving credit has increased by $4.9 billion or 0.5%. Revolving debt is now close to its 2006-2007 levels and just 4.4% above its July 2008 peak. Non-Revolving Credit, including auto and education loans, ROSE by $16.1 billion. Over the past year, non-revolving credit has increased by $148.1 billion or 4.9%. Of this amount, $92.8 billion, or 62.6%, appears to be due to increases in student loans held by the federal government.