Market Dynamics Contribute to Consumer Credit Growth

Consumer credit outstanding grew by a seasonally adjusted annual rate of 5.8%, $206.6 billion, in the month of February 2016, 0.7 percentage point faster than the 5.1% rate of growth recorded in January. Consumer credit outstanding now totals $3.568 trillion.

The increase in total consumer credit outstanding partly reflected an expansion in the outstanding amount of revolving consumer credit. The outstanding amount of revolving credit, which is largely composed of credit card debt, increased by a seasonally adjusted annual rate of 3.7% or $35.0 billion over the month of February, reversing the 0.3% decline recorded in January. There is now $941 billion in outstanding revolving credit.

Non-revolving credit also contributed to the rise in total outstanding consumer credit. However, the pace of growth in February slowed from its rate in January. In February, non-revolving credit outstanding, which includes student loans and auto loans, climbed by a seasonally adjusted annual rate of 6.6% or $171.6 billion in February, 0.4 percentage points slower than its level in January, 7.0%. There is now $2.627 trillion in outstanding non-revolving credit.


The most recent iteration of the Federal Reserve’s Senior Loan Officer Opinion Survey reported that the change in lending standards was consistent across all consumer credit products. A previous post documenting these results, illustrated that lending standards on net eased on credit cards, auto loans, and other consumer loan products. Although the trend in net lending standards was consistent across all consumer credit products, the pace of demand, on net, differed across these same consumer loans. Auto loans recorded stronger demand on net, demand for credit cards were unchanged, while demand for other consumer credit weakened over the quarter.

As illustrated by Figure 1 above, demand for credit cards on net was unchanged from the previous quarter. Net demand is the difference between the percentage of banks reporting stronger demand and the proportion saying that demand had weakened. According to Figure 1, the share of bank respondents reporting strong demand for credit cards was exactly offset by the portion saying that demand was weaker. Auto loan demand was moderately stronger on net as the proportion of senior loan officers reporting stronger demand, 14.3%, exceeded those reporting that demand was weaker, 12.7%. Meanwhile, demand for other consumer credit weakened on net as a greater percentage of respondents reported that demand had weakened, 13.4% than had said that demand strengthened, 4.5%.


While the headline results indicate that the change in demand over the quarter differed across consumer credit products, the underlying figures show more consistency, stronger demand on net across all consumer credit products was observed by senior officers at large banks while weaker demand on net was experienced by other, smaller banks. Large banks refer to large, national banks while “other” banks encompass large, but regional banks. The headline change in net demand for each consumer credit product reflected the comparative size in the change in net demand for that product between large banks and other, smaller banks.

Previous NAHB analysis found that depository institutions hold the majority of consumer credit outstanding. Moreover, the overwhelming majority of consumer credit is held at large banks. Since large banks account for the bulk of outstanding consumer credit then reports of rising demand at these banks are a reasonable proxy for overall consumer credit demand. Combined, growing demand at larger banks and easing lending standards across all banks have contributed to the growth in consumer credit outstanding.

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