The newest report from the Federal Reserve Board of Governors on credit utilization, released late this afternoon, showed that Americans’ borrowing activity firmed in September. Specifically, total U.S. consumer credit outstanding expanding by $19.3 billion at a seasonally adjusted annual rate of 6.3 percent. That was better than the $18.7 billion gain economists had expected, and the August surge was revised even higher to $26.8 billion. Non-revolving credit, e.g. student and automobile loans, rose by $15.1 billion in September, the 61st month-over-month gain in a row. As for revolving credit, this metric of Americans’ credit card use lifted by $4.2 billion in September, a healthy monthly gain. Moreover, the longer-term trends of an acceleration in revolving credit growth and a somewhat stalled expansion in non-revolving credit remain clearly intact. Overall, this was another encouraging report on consumer credit and the findings are corroborated by the Federal Reserve board’s most recent Beige Book, which reported an “overall increase in loan demand and modestly stronger loan quality, while credit standards remained relatively unchanged.” Similarly, the FDIC’s recently released Quarterly Banking Profile reported “declining delinquency rates on net, as the noncurrent loan rate fell to its lowest level since 2007 in the second quarter.” Such positive developments should persist as long as job creation and household balance sheets continue to improve and enable more Americans to take on additional debt.
Sources: Econoday, ZH, FRBG, Wells Fargo, FDIC, FRBSLPost author: Charles Couch