In January 2020, consumer credit decreased at a seasonally adjusted annual rate by 0.4% from the previous month, with revolving debt1 decreasing by 12.2% and nonrevolving debt2 increasing by 3.2%. Consumer credit totaled $4.2 trillion on a seasonally adjusted annual basis, with $965 billion comprised of revolving debt and $3.2 trillion in nonrevolving debt. This marks a total decrease of $1.3 billion from the previous month, with revolving credit decreasing by $9.9 billion and non-revolving credit increasing by $8.6 billion.
As shown above, November’s revolving debt level marks the 11th consecutive month of decline, a trend which started with the onset of the COVID-19 pandemic. Such continuation of the reduction in the balance of open-ended credit reflects consumers’ lingering uncertainty in recovery from the virus-caused recession. Its closed-ended counterpart, non-revolving debt, was quick to recover from negative territory in April 2020.
Interestingly, the latest G.19 Consumer Credit data show that, on a non-seasonally adjusted basis, credit extended by the Federal Government, which is exclusively closed-ended, jumped by about $20 billion to $1.40 trillion, the largest increase in recent history.
- 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.
- Nonrevolving credit is closed-end credit extended to consumers that is repaid on a prearranged repayment schedule and may be secured or unsecured.