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Consumer credit growth slows further
Total consumer credit grew at a seasonally-adjusted, annualized rate of 1.2 percent in October and is up 3.1 percent compared to a year ago. NAFCU Vice President of Research and Chief Economist Curt Long, in a new Macro Data Flash report, noted the decelerated growth resulted “in the slowest pace of growth on a year-over-year basis since April 2021.”
“Revolving credit in particular is down sharply from a year earlier,” Long said. “When revolving credit growth exceeded 15 percent, this was taken as a signal of distress in the household sector, with the theory being that many were forced to borrow even in a high-rate environment due to rising inflation.
"An honest adherent of this view would have to conclude that the outlook for households has improved considerably as revolving debt growth has slowed. What tends to get less attention is that developments in household credit expansion over 2023 track closely with changes in credit availability, as lenders have tightened credit supply over the course of the year due to ongoing liquidity stresses. NAFCU expects growth in consumer credit balances to continue to slow until liquidity conditions improve,” Long concluded.
Revolving credit – primarily credit cards – rose 2.7 percent and is up 9.3 percent compared to October 2022. Non-revolving credit – primarily auto and education loans – rose 0.7 percent in September and is up 1 percent from a year ago.
Total consumer credit for credit unions grew 0.3 percent in October. Banks experienced a 0.1 percent loss, and finance companies saw a gain of 0.3 percent. From a year prior, total consumer credit at credit unions rose 7.2 percent, while banks experienced a 4.3 percent gain and financial companies grew 5.8 percent.
Over the past 12 months, credit unions’ share of the market rose 0.5 percent to 13.4 percent. Banks’ share rose 0.5 percent, and finance companies’ share rose 0.4 percent.
For more up-to-date economic insights from NAFCU's award-winning research team, view NAFCU’s Macro Data Flash reports.