U.S. Consumer Credit Growth Is Surprisingly Weak in January
Summary
- Nonrevolving credit growth is smallest since 2020.
- Revolving credit usage slows sharply.
Consumer credit grew by $14.8 billion (7.9% y/y) during January after increasing $10.7 billion in December, revised down from $11.6 billion. The Action Economics Forecast Survey indicated an expectation of a $25.0 billion gain. The December-January readings were the weakest two-month increase in two years, and it followed gains that averaged $30 billion per month in the previous year. Credit growth did not keep pace with the rise in income in the January, as the ratio of consumer credit outstanding to disposable personal income declined to 24.5% from 24.9% in December.
The weakness in consumer credit around yearend were centered in nonrevolving credit balances, which reflect secured and unsecured credit for some big-ticket, interest-sensitive items such as autos, mobile homes, trailers, durable goods, vacations, etc. Nonrevolving credit edged $3.6 billion higher (5.5% y/y) in January after increasing $3.8 billion in November, revised from $4.4 billion. In comparison, these nonrevolving balances had been posting gains in the $16 billion range for the past year. While nonrevolving credit is a volatile series and big swings are common, this sudden slowdown bears watching as it may reflect the recent rise in interest rates.
Revolving consumer credit picked up in January, rising $11.2 (15.6% y/y) following a $6.9 billion December increase, revised from $7.2 billion. The January increase in these credit balances, which mainly reflect credit card usage, was in line with typical gains over the past year.
The value of motor vehicle loans outstanding increased 7.5% y/y in the fourth quarter of 2022, up from 3.4% in 2020. The value of student loans outstanding rose 1.4% y/y, down from a high of 14.7% in 2008.
These Federal Reserve Board figures are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of the Census and Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver's USECON database. The Action Economics forecast figures are contained in the AS1REPNA database.
Semiannual Monetary Policy Report to the Congress by Fed Chair Jerome H. Powell can be found here.
Peter D'Antonio
AuthorMore in Author Profile »Peter started working for Haver Analytics in 2016. He worked for nearly 30 years as an Economist on Wall Street, most recently as the Head of US Economic Forecasting at Citigroup, where he advised the trading and sales businesses in the Capital Markets. He built an extensive Excel system, which he used to forecast all major high-frequency statistics and a longer-term macroeconomic outlook. Peter also advised key clients, including hedge funds, pension funds, asset managers, Fortune 500 corporations, governments, and central banks, on US economic developments and markets. He wrote over 1,000 articles for Citigroup publications. In recent years, Peter shifted his career focus to teaching. He teaches Economics and Business at the Molloy College School of Business in Rockville Centre, NY. He developed Molloy’s Economics Major and Minor and created many of the courses. Peter has written numerous peer-reviewed journal articles that focus on the accuracy and interpretation of economic data. He has also taught at the NYU Stern School of Business. Peter was awarded the New York Forecasters Club Forecast Prize for most accurate economic forecast in 2007, 2018, and 2020. Peter D’Antonio earned his BA in Economics from Princeton University and his MA and PhD from the University of Pennsylvania, where he specialized in Macroeconomics and Finance.
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