Consumer Credit Increases in January 2019

On a seasonally adjusted, annual basis, the latest data from the Federal Reserve Board’s G.19 Consumer Credit report show that all non-mortgage consumer credit, increased at 5% in January 2019 from the previous month, of which revolving1 and nonrevolving debt2 increased 2.9% and 5.9%, respectively. As of January 2019, consumer credit totaled $4.0 trillion, $1.1 trillion of which was revolving debt and $3.0 trillion of which was nonrevolving debt. Recent data show stronger household formations in 2018 among all age groups under 64, which may correlate well with the plateauing shares of student and loans debt, the two largest components of nonrevolving, non-mortgage-related debt.

The chart below shows the historical trends of the seasonally adjusted annual growth rates (or decline, in fewer cases) on a monthly basis.

As seen from the above chart, the monthly changes of nonrevolving debt, which include student and auto loans, have closely mirrored the changes in total debt. This is expected because nonrevolving debt has historically made up the majority of consumer credit. Since 2013, the changes in nonrevolving debt have been mostly positive, posting only one decline which occurred in December 2015. On the other hand, revolving debt has posted more frequently occurring negative changes and has been more volatile.

A previous post had featured the Federal Reserve’s study of student loan debt’s dampening effect on younger age-group cohorts’ homeownership rates. However, as can been seen from the data on consumer credit (i.e., all consumer credit excluding loans secured by real estate), shown in the figure below, both student and auto loans’ shares of total consumer credit have plateaued since their rise during and following the Great Recession. Currently, as of the fourth quarter of 2018, the share of student and auto loans is 67.8%, for which lower levels have not been seen since the fourth quarter of 2015.


Note:
 

[1] According to the Federal Reserve’s G.19 Consumer Credit report, revolving credit plans, which are largely composed of credit card debt but also include home equity lines of credit (HELOCs), may be unsecured or secured by collateral and allow a consumer to borrow up to a prearranged limit and repay the debt in one or more installments.

[2] According to the Federal Reserve’s G.19 Consumer Credit report, nonrevolving credit is closed-end credit extended to consumers that is repaid on a prearranged repayment schedule and may be secured or unsecured.



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