Consumer Credit: Stronger On Student Loans, But Trend Slowing

Bottom Line: While stronger than expected in September on the back of more student loans, consumer credit growth is still decelerating modestly on a tend basis. Revolving debt increased but has risen only slightly over the past year. Meanwhile, non-revolving debt rose sharply with over half 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 slightly higher at 18.3%. Consumer Credit ROSE by $20.8 billion in September, compared with market expectations for an increase of $17.5 billion. Over the past year, consumer credit has increased by $200.0 billion or 5.6%. Revolving Credit, including credit cards, ROSE by $6.4 billion. Over the past year, revolving credit has increased by $53.4 billion or 5.6%. Revolving debt is now close to its 2006-2007 levels but still 1.5% below its July 2008 peak. Non-Revolving Credit, including auto and education loans, ROSE by $14.4 billion. Over the past year, non-revolving credit has increased by $146.6 billion or 5.6%. Of this amount, $99.9 billion, or 68.1%, appears to be due to increases in student loans held by the federal government.