Consumer credit growth has been trending down since July – but grew this month. It is interesting that student loan growth has not been distorting one's view of the consumer credit growth as the rate of growth is now slightly decelerating. Overall, consumer credit is growing at roughly double GDP growth and repayment of consumer debt is taking a larger share of disposable income. The current trends are not sustainable unless there is a similar increase of growth in disposable income.
The headline said:
In November, consumer credit increased at a seasonally adjusted annual rate of 5 percent. Revolving credit decreased at an annual rate of 1-1/4 percent, while nonrevolving credit increased at an annual rate of 7-1/2 percent.
Econintersect's view:
Unadjusted Consumer Credit Outstanding
| |
Month- over- Month Growth |
Year- over- Year Growth |
Month- over- Month Growth without Student loans |
Year- over- Year Growth without Student Loans |
| Total |
+0.2% |
+7.1% |
+0.3% |
+4.4% |
| Revolving |
+0.2% |
+3.5% |
n/a |
n/a |
| Non- Revolving |
+0.2% |
+8.4% |
+0.3% |
+5.0% |
Overall takeaways from this month's data:
Student loan growth has been decelerating gradually since the beginning of 2013;
Student loans had little effect on the rate of non-revolving credit growth this month as the data accelerated almost the same amount whether student loans were considered or not ;
Revolving credit (credit cards and this series includes no student loans) has been slightly accelerating generally for most of 2014 (backward revisions this month changed the trend duration);
The backward revision AGAIN this month as usual was significant enough to distort how one views the short term trends.
The market expected consumer credit to expand $13.1 to $18.5 billion (consensus = $15.0 billion) versus the seasonally adjusted headline expansion of $14.1 billion reported.
Note that this consumer credit data series does not include mortgages.
The Econintersect analysis is different than the Fed's:
an effort is made to segregate student loans from consumer credit to see the underlying dynamics;
this analysis expresses growth as year-over-year change, not one month's change being projected as an annual change – which creates a lot of volatility and distortion.
where our analysis expresses the change as month-over-month, month-over-month change is determined by subtracting the previous month's year-over-year improvement from the current month's year-over-year improvement.
