Non-Revolving Debt Spikes in Second Quarter

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In the second quarter of 2021, non-real estate-secured consumer credit increased at a seasonally adjusted annual rate by 8.8%, with revolving debt1 increasing by 10.7% and nonrevolving debt2 increasing by 8.3%. Consumer credit totaled $4.3 trillion on a seasonally adjusted annual basis, with $992 billion comprised of revolving debt and $3.3 trillion in nonrevolving debt. This outstanding level marks a total increase of $93 billion from the first quarter, with revolving credit increasing by $26 billion and non-revolving credit increasing by $67 billion.

The newly released data also included upward revisions to earlier estimates of consumer credit (going  back 5 years).

As seen above, revolving debt (comprising largely of credit card debt) not only recovered from the negative territory that had been typical during the ongoing pandemic, but also increased at a rate which was unprecedented for over a decade.

With a new quarter’s worth of data, the latest G.19 report also featured new entries for the current levels of outstanding Student Loan debt and Motor Vehicle Loan debt, which were $1.7 trillion and $1.3 trillion, respectively, on a non-seasonally adjusted basis. Motor Vehicle Loan debt increased by $40 billion, the largest numerical increase in this category on record. With many Americans now operating on a hybrid work model, the increase in motor vehicle loan debt strikes an interesting chord with results from NAHB’s Home Building Geography Index (pertaining to Q1 2021) that showed home building expanding most in regions with the fastest commute times.


Notes:

  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 debt 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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