Consumer Credit:  Slower Than Expected As Credit Card Borrowing Slows

Bottom Line: Consumer credit rose less than expected for the second month in a row. Strong growth in the 4th Quarter was led by credit card growth, which was likely a function of both hurricane-related emergency spending and strong pre-holiday spending. But now that credit growth appears to be slowing again, largely a function of slower loan demand. With consumer credit lending standards broadly unchanged, consumer credit trends will be important to watch as consumers react to tax cuts in the coming quarters. For now the start of 2018 showed only a tepid desire to borrow on revolving credit. Consumer Credit ROSE by $13.9 billion in January, compared with market expectations for an increase of $17.7 billion. The prior two months were revised higher by $0.7 billion. Over the past year, consumer credit has increased by $194.8 billion or 5.3%. Revolving Credit, including credit cards, ROSE by $0.7 billion. Over the past year, revolving credit has increased by $59.3 billion or 6.1%. Revolving debt is now close to its 2006-2007 levels and just 0.9% above its July 2008 peak. Non-Revolving Credit, including auto and education loans, ROSE by $13.2 billion. Over the past year, non-revolving credit has increased by $135.5 billion or 5.0%. Of this amount, $96.1 billion, or 70.9%, appears to be due to increases in student loans held by the federal government.