Summary of Consumer Credit Trends

 

Summary of Consumer Credit Trends

The latest consumer credit data highlights trends in borrowing across different sectors. Here's a simplified overview:

1. Total Consumer Credit:

   • Monthly growth: +0.34%

   • Annual growth: +1.71%

2. Revolving Credit:

   • Growth led by Depository Institutions (+1.01% monthly, +3.90% annually) and Credit Unions (+0.62% monthly, +4.45% annually).

   • Declines for Finance Companies (-0.41% monthly, -12.53% annually).

3. Nonrevolving Credit:

   • Depository Institutions: Slight monthly growth (+0.25%) but annual decline (-2.10%).

   • Federal Government: Stable growth (+0.08% monthly, +3.56% annually).

   • Nonprofit and Educational Institutions: Significant declines (-1.31% monthly, -11.44% annually).

4. Other Key Points:

   • Credit owned by Nonfinancial Businesses grew monthly by +1.25%.

   • Overall, credit owned by Credit Unions showed steady growth.

Insights

• Revolving credit is growing, especially through credit unions and banks, reflecting increased consumer reliance.

• Finance companies are struggling with declines in credit.

• Federal government lending is on the rise, indicating reliance on government-backed loans.

• Nonprofit and educational credit shows steep declines, possibly due to reduced student borrowing.

Analysis of Plots

The provided plots further illustrate trends in consumer credit over time:

1. Total Consumer Credit Owned and Securitized:

   • The upper plot shows a steady and consistent rise in total consumer credit since 2000, reaching a peak value of 5,098.62 in 2024.

   • This trend indicates sustained growth in consumer borrowing, likely driven by economic expansion and increasing reliance on credit over the past two decades.

2. Year-over-Year Percentage Change in Total Consumer Credit:

   • The lower plot displays fluctuations in the annual percentage change, with notable peaks and troughs.

   • The average annual growth rate is approximately 4.90%, represented by the blue dotted line.

   • The most recent annual growth of 1.71% reflects a slowdown compared to historical averages, signaling potential cooling in consumer borrowing activity.

   • Significant dips, such as during the 2008 financial crisis and the 2020 pandemic, highlight the sensitivity of consumer credit to economic shocks.

Conclusion

The data and accompanying plots provide valuable insights into the evolution of consumer credit. While overall credit continues to grow, the recent slowdown in annual growth underscores the need for vigilance, especially amidst economic uncertainties. Policymakers and businesses should leverage these trends to adapt strategies and address emerging challenges.