Consumer Credit

This monthly series from the Federal Reserve’s G.19 Statistical Release provides data on outstanding consumer credit excluding mortgages and real-estate related loans. It tracks both revolving and non-revolving debt – credit card loans make up the majority of revolving debt while car and student loans comprise the bulk of non-revolving debt. The series calculates annual percentage changes using responses from mandatory and voluntary surveys and reports on data from two months prior.  

Today’s consumer credit report increased by 3.8% in February on a seasonally-adjusted annual basis, down from 4.9% in the month prior. According to the report, revolving credit growth of 5.0% was the slowest in nearly two years while nonrevolving credit growth ticked up to 3.4%.

As shown in the graph above, it’s clear that credit growth has slowed significantly after having boomed for the last two years. This slowdown is due to multiple factors, such as rising interest rates, banks tightening their lending standards, and consumers starting to become overleveraged.  It’s also worth noting that this data is for February and does not reflect the impact that recent bank industry turmoil will have on regional banks’ willingness and ability extend credit. 

It now appears that consumers are limited in their ability to take on new debt, which could have a negative impact on consumer spending if this trend continues in the months to come. Stay tuned…