US consumer credit increased at a seasonally adjusted annualised rate of 4.2 per cent in July. Non-revolving credit grew 4.8 per cent, while revolving credit, which includes credit cards, rose 2.5 per cent. The split shows that instalment categories such as vehicle and education loans supplied most new borrowing, although the release does not by itself measure households' ability to repay.
Federal Reserve data showed US consumer credit increasing at a seasonally adjusted annualised rate of 4.2 per cent in July. Annualisation expresses the month's change as if that pace continued for a year; it does not mean credit actually rose 4.2 per cent over twelve months. KPMG reported the same rate and said non-revolving loans supplied most of the increase. Expressed at an annual rate, the month's total flow came to 216.7 billion dollars.[1], [2]
Revolving credit, which includes credit cards, grew at a 2.5 per cent annualised rate, while non-revolving credit such as vehicle and education loans increased 4.8 per cent. The flow amounts sharpen the distinction: of the 216.7 billion dollars annualised total, 33.6 billion dollars came from revolving credit and 183.1 billion dollars from non-revolving loans. Most new borrowing in July therefore sat in fixed-term instalment categories rather than reusable card balances.[1]
Outstanding consumer credit stood at 5,186.2 billion dollars at the end of July. Revolving balances accounted for 1,357.2 billion dollars and non-revolving loans for 3,829.0 billion dollars. Those totals describe the size and composition of borrowing; by themselves they do not establish household income, delinquency rates or borrowers' capacity to repay. Faster instalment-credit flows therefore cannot be treated as direct evidence of either stronger consumption or greater financial distress. The useful comparison in later releases is how new credit flows change alongside repayment performance.[1]
