Consumer Credit Update (2011 October)

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 nonrevolving 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 and Direct Loans projections.

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

2011 Q1 2011 Q2 r 2011 Q2 r
Total 2,421.5 2.2% 2,442.5 3.5% 2,442.5 3.5%
Revolving 792.8 -3.7% 795.9 1.6% 795.9 1.5%
Nonrevolving 1,628.6 5.1% 1,646.6 4.4% 1,646.6 4.4%

Not much of a change. Here’s what we get for August.

2011 Q2 r 2011 July r 2011 August p
Total 2,442.5 3.5% $2,454.4 5.9% 2,444.9 -4.6%
Revolving 795.9 1.5% $792.3 -5.4% 790.1 -3.4%
Nonrevolving 1,646.6 4.4% $1,662.1 11.3% 1,654.8 -5.2%

So there’s a seasonally adjusted drop last month in consumer debt. Good.

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.

July (revised) August (preliminary) Numeric Change Annualized Increase
Total NRV 1,652.6 1,661.7 9.1 6.8%
Government 385.7 391.8 6.1 20.7%
Commercial Banks 491.3 492.5 1.2 3.0%
Finance Companies 432.7 434.1 1.4 4.0%
Credit Unions 186.6 188.7 2.1 14.4%
Savings Institutions 37.0 37.3 0.3 10.2%
Nonfinancial Business 44.7 44.9 0.2 5.5%
Pools of Securitized Assets 74.5 72.3 -2.2 -30.2%

In non-seasonally adjusted terms, nonrevolving debt still increased, and government-held debt is still growing the fastest, though not as fast as July when it grew at a 64.1% 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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