Consumer credit growth did accelerate moderately in March 2015. Again this month, student loans are not distorting analysis of consumer credit growth. Consumer credit annual growth rate significantly above GDP’s annual growth rate – and repayment of consumer debt is taking a larger share of disposable income.
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The headline said:
Consumer credit increased at a seasonally adjusted annual rate of 5-1/2 percent during the first quarter. Revolving credit decreased at an annual rate of 1/4 percent, while nonrevolving credit increased at an annual rate of 7-1/2 percent. In March, consumer credit increased at an annual rate of 7-1/2 percent.
Econintersect’s view:
Unadjusted Consumer Credit Outstanding
| Â | Month- over- Month Growth | Year- over- Year Growth | Month- over- Month Growth without Student Loans | Year- over- Year Growth without Student Loans |
| Total | +0.1 % | +7.0 % | +0.1 % | +4.5% |
| Revolving | +0.4 % | +3.5 % | n/a | n/a |
| Non- Revolving | -0.1 % | +8.2 % | -0.1 % | +5.1% |
Overall takeaways from this month’s data:
- Student loan growth rate has been decelerating gradually since the beginning of 2013;
- Even though student loans was the major influence this month, as its rate of growth is decelerating at about the same rate as the consumer credit in general – the effect of student loans is not noticeable in the trends. This month specifically, student loans growth rate was statistically unchanged year-over-year.
- Revolving credit (credit cards and this series includes no student loans) which had been slightly accelerating for most of 2014, but decelerated in 1Q2015. Specifically this month revolving credit rate of growth did accelerate year-over-year.;
- There was moderate backward revision which continues to distort “real time” analysis.
The market expected consumer credit to expand $14.0 to $20.0 billion (consensus = $15.9 billion) versus the seasonally adjusted headline expansion of $20.5 billion reported.
Note that this consumer credit data series does not include mortgages.
The Econintersect analysis is different than the Fed’s:
- an effort is made to segregate student loans from consumer credit to see the underlying dynamics;
- this analysis expresses growth as year-over-year change, not one month’s change being projected as an annual change – which creates significant volatility and distortion.
- where our analysis expresses the change as month-over-month, month-over-month change is determined by subtracting the previous month’s year-over-year improvement from the current month’s year-over-year improvement.
