The Federal Reserve Board said that U.S. consumer credit rose by $8.0 billion, or 3.4 percent, in March. This was slower than anticipated, with the consensus estimate expected to show a $15.0 billion increase. Total debt outstanding was $2.8075 trillion, with $846.2 billion in revolving credit and $1.9613 trillion in nonrevolving loans outstanding.
The other big headline in this data was the decline in revolving loans for the month, which includes credit cards and other lines of credit. The value of revolving credit decreased by 2.4 percent for the month, and in the first quarter of 2013, it eked out just a 0.2 percent gain. In general, we have seen some deleveraging in revolving credit since the end of the recession, with these lines up just 0.2 percent and 0.4 percent in 2011 and 2012, respectively.
Regarding the decline in the March data, this is consistent with analysis showing an easing of both personal income and personal spending. This suggests that the pullback in purchases also meant a decline in credit card borrowing for the month.
Meanwhile, nonrevolving lines of credit increased 5.9 percent in March, or 8.1 percent in the first three months of the year. This category, which includes auto and student loans, has seen tremendous growth over the past couple years. These loans have helped to finance greater motor vehicle sales – one of the larger drivers of economic growth of late. But, growth in student lending, which is administered now by the federal government, has been tremendous, up 23.9 year-over-year. When you exclude the federal government from the analysis, nonrevolving loans were 3.3 percent higher than they were one year ago.
This suggests that consumer debt is consumer indebtedness has moved only modestly over the past 12 months. While overall credit outstanding is 5.7 percent year-over-year, the bulk of that growth was in auto and student loans, particularly the latter.
Chad Moutray is chief economist, National Association of Manufacturers.