Let the Good Times Roll: Consumer Credit Surges in October

Source: http://www.flickr.com/photos/ameriswede/

Source: http://www.flickr.com/photos/ameriswede/

Total consumer credit outstanding in the United States increased at a seasonally adjusted annual rate of 7.1 percent in October, according to data released by the Federal Reserve on Friday afternoon. Non-revolving credit (mostly car and student loans) once again led the increase, climbing at an annual rate of 7.5 percent. Revolving credit (such as credit cards) increased at an annual rate of 6.1 percent.

October’s increase amounts to a total credit expansion of $18.2 billion, above economist expectations for an expansion of $15 billion. Total credit flow of $218.2 billion was up 11.6 percent on the month.

Revolving credit growth, which is one indicator of consumer confidence and spending, has been pretty touchy for most of the recovery. October’s 6.1 percent spike is enormous compared to September’s 0.3 percent contraction and August’s 1.4 percent growth. Revolving credit expanded just 0.4 percent in the third quarter following a 1.2 percent increase in the second quarter.

The graph below shows total revolving credit owned and securitized in red and the annual growth rate of credit card and other revolving loans in blue. At a glance, it’s easy to see that total revolving credit outstanding is well below the pre-crisis peak (and that credit expanded tremendously ahead of the crisis before crashing); that growth has been somewhat fickle since first turning positive in 2011.