April Consumer Credit Indicates Recovery Challenges


The Federal Reserve’s latest G.19 Consumer Credit Report shows trends in consumer credit, excluding loans secured by real estate, through April 2020.

In April, consumer credit decreased at a seasonally adjusted annual rate of 19.6% from the previous month, with revolving debt1 decreasing by 64.9% and nonrevolving debt2 decreasing by 4.0 percent. Consumer credit totaled $4.1 trillion on a seasonally adjusted basis, with $1.0 trillion in revolving debt and $3.1 trillion in nonrevolving debt. This is a decrease of $69 billion from the previous month, with revolving debt decreasing by $58.3 billion and non-revolving credit adding to the decrease by $10.5 billion. This month marked the first time since the end of 2015 for which total consumer credit declined.

As can be seen from the above figure, consumer credit declined even further than it had in March. The previous time such dramatic monthly decreases were seen was in December 2015, where, for the first time in seven years following the 2008 financial crisis, the Federal Reserve raised interest rates by 25 basis points from near-zero levels at that time. Since revolving debt data began to be collected in 1968, April’s revolving debt’s percentage decline was the largest monthly decline on record.

The current decline owes to many Americans’ uncertainty in long-term prospects. Mounting job losses in April (namely, that of payroll employment) prompted many to decrease their debt holdings, both revolving and nonrevolving. Recently instated nationwide shelter-in-place orders, aimed at slowing the spread of COVID-19, also significantly contributed to the widespread decline in non-real estate-related consumer credit. However, many economic indicators turned positive in May, and we expect to see improvements in this data series as well.


  1. Revolving credit plans are largely composed of credit card debt but also include home equity lines of credit (HELOCs). These 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. The G.19 Consumer Credit report excludes HELOCS and home equity loans, as they are secured by real estate.
  2. Nonrevolving credit is closed-end credit extended to consumers that is repaid on a prearranged repayment schedule and may be secured or unsecured.

Tags: , , , , , , ,

1 reply

  1. Isn’t this likely because the peak of business shutdowns and unemployment occured in April and doesn’t the last jobs report contradict this prediction?

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: