Monday, May 7, 2012

The Consumer is Back... Consumer Credit Positive (Even Excluding Student Loans)

SF Gate details:

Consumer borrowing in the U.S. surged in March by the most in more than a decade on growing demand for educational financing and autos.

Credit rose by $21.4 billion, the biggest gain since November 2001, to $2.54 trillion, Federal Reserve figures showed today in Washington. The advance was paced by a $16.2 billion jump in non-revolving debt, including student and car loans.

Americans may have been trying to get school financing before a possible increase in interest rates takes place on July 1. Rising consumer confidence also means that households are more willing to take on debt to boost spending, which accounts for about 70 percent of the economy.
I've been showing the below chart for some time. It shows the year-over-year change in revolving consumer credit, non-revolving consumer (excluding student loans), and student loans. Headline consumer credit has been growing since early last year, but this had been solely due to student loans (not necessarily a bad investment, but it doesn't reflect consumers re-leveraging for goods and services).

Well, as the chart shows, after a strong March where revolving consumer credit (i.e. credit cards) jumped 7.8% month over month and non-revolving (excluding student loans) posted a positive print... the day has arrived in which the consumer is no longer deleveraging in nominal terms (important for all that nominal debt out there).

We'll see if this continues, but the consumer looks like they may be back.


  1. Wonder what would correlating these numbers with rising gasoline prices would show.

    Not trying to dis your analysis but it seems to make some sense that the spike in gas prices would account for some of the growth in credit card debt might be a mover of the increase.

  2. Oops. Sorry for that clumsy first sentence. Proof read, proof read, proof read!

  3. The Story the Market is Telling Now: May 7-12 Update