Consumer Credit Update (2011 September)

It’s the fifth business day of the month, which means the Federal Reserve has updated its G.19 Release, its estimate of outstanding consumer credit. One problem the U.S. economy faces is that consumer credit is growing faster than the economy. While the G.19 Release doesn’t quantify how much nonrevolving debt is student debt, it is very likely that most increases in that category are attributable to the Direct Loan Program’s student loans because of high tuition and the near impossibility of discharging student debt in bankruptcy. All figures are billions of dollars, and all percentages are annualized. Link here for my ongoing analysis of increasing nonrevolving debt relative to GDP.

This month, the Fed revised the second quarter 2011 numbers. These are seasonally adjusted.

2011 Q1 r 2011 Q2 p 2011 Q2 r
Total 2,421.5 2.2% 2,446.1 bln 4.3% 2,442.5 3.5%
Revolving 792.8 -3.7% 798.3 bln 3.9% 795.9 1.6%
Nonrevolving 1,628.6 5.1% 1,647.8 bln 4.6% 1,646.6 4.4%

It appears the amount of consumer debt didn’t grow as much in Q2 as originally thought. Here’s what we get in July.

2011 Q1 r 2011 July preliminary
Total 2,442.5 3.5% 2,454.5 5.9%
Revolving 795.5 1.6% 792.5 -5.2%
Nonrevolving 1,646.6 4.4% 1,662.0 11.2%

So in July nonrevolving credit increased rapidly while revolving credit contracted again.

As for holdings of nonrevolving debt, government holdings account for nearly all the growth of nonrevolving credit as well as the largest annualized increase. These numbers are not seasonally adjusted and do not sum together; annualized increases are mine.

June (revised) July (preliminary) Numeric Change Annualized Increase
Total NRV 1,636.1 1,652.6 16.5 12.8%
Government 370.1 385.7 15.6 64.1%
Commercial Banks 490.5 491.2 0.7 1.7%
Finance Companies 430.8 432.7 1.9 5.4%
Credit Unions 185.1 186.7 1.6 10.9%
Savings Institutions 36.7 37.0 0.3 10.3%
Nonfinancial Business 44.8 44.7 -0.1 -2.6%
Pools of Securitized Assets 78.2 74.5 -3.7 -44.1%

Increase in government holdings of nonrevolving credit accelerated significantly from June, when it grew at an 18.5% annualized rate. According to the BEA, real economic output grew at a 0.4% in Q1 2011 and 1.3% in Q2.

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