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The Week In Review: Consumer Credit Growth Slowing

Steven Hansen profile picture
Steven Hansen


  • Inflation-adjusted consumer credit growth has dropped below GDP growth for over one year if one removes student loans.
  • Note that consumer credit does not include mortgages.
  • It is student loans which remain with unsustainable growth.

The December Consumer Credit data shows consumer credit growth remains soft, and if one removes student loans - and adjusts for inflation - then the year-over-year growth is lower than GDP growth. Also this week there are two missed data sets because of the government shutdown.

Unadjusted Consumer Credit Outstanding

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 % +4.7 % +0.1 % +3.3 %
Revolving -0.5 % +2.0 % n/a n/a
Non- Revolving +0.3 % +5.6 % +0.4 % +4.0 %

Overall takeaways from this month's data:

  • Year-over-year growth rate of student loans had been decelerating gradually since the beginning of 2013, but in the past year, there has been little change in the rate of growth.
  • Student loan growth rate (US government owned) accelerated 0.0% month-over-month, and the year-over-year growth is 8.0% (Note that the data last month was revised upward).
  • Revolving credit (e.g., credit cards - and this series includes no student loans) has been slightly decelerating in Jan. 2017.

Let's take a quick look at consumer credit rate of growth adjusted for inflation. Currently the rate of year-over-year inflation-adjusted consumer credit growth is 2.7% - unfortunately we do not know the 4Q 2019 real GDP growth - but in 3Q 2019 the year-over-year growth was 3.0%.

Focusing on student loans only, even though the rate of growth is slowing, it is still growing at an unsustainable rate.

Year-over-Year Growth Rate Student Loans

Overall, when ignoring student loans, consumer credit growth is currently growing at a sustainable rate. The following graph plots the year-over-year growth of consumer credit and GDP.

Inflation Adjusted Consumer Credit (less student loans) Vs. GDP Growth

And for over one year, inflation-adjusted consumer credit is growing slower than GDP.

Economic Releases This Past Week

The Econintersect Economic Index for February

This article was written by

Steven Hansen profile picture
Steven Hansen (A.K.A "The Hand") was born, raised and educated in California. Steven worked for 25 years for a major international engineering and construction corporation. He has lived outside of the USA almost continuously since 1978. Steven retired in 1995 to sail the world. He is still sailing today and is currently located in Malaysia. On the financial side, Steven is a pragmatist. His motto is to "go with the flow" and believes that the only correct investing method is one which makes you money both short and long term. He does not fall in love with philosophies – only results. He has invested well enough to retire at 45 and stay retired.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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