In the just reported consumer credit data released by the Fed, revolving credit outstanding on a seasonally adjusted basis rose $3.4b m/o/m to $857.6b. That is the highest since May but looking at a longer term chart reflects more bouncing along the bottom.

While nominal GDP growth is at new highs, revolving credit outstanding remains 16.5% below the ’08 record highs. AMEX CEO said it best this week at a conference that the US consumer is “generally reluctant to borrow” and “not demonstrating a desire or willingness to increase that debt burden.” On the nonrevolving side of credit outstanding, debt is at an all time high and that’s been mostly driven of late by student loans outstanding. Student loans held at the Fed’l Govt have increased from $104b in 2008 to $516b in Oct ’12.

Also boosting the nonrevolving credit side of late has been the increase in auto loans which cheap credit from the Fed has helped to engineer at the same time the ABS market has come back to life in the search for yield.

Category: MacroNotes, Think Tank

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3 Responses to “Student and auto loans still driving consumer credit gains”

  1. Moopheus says:

    “AMEX CEO said it best this week at a conference that the US consumer is “generally reluctant to borrow” and “not demonstrating a desire or willingness to increase that debt burden.””

    They say that like it’s a bad thing. Maybe people are finally realizing that a debt burden is just that: a burden. Life is better without that burden.

  2. Woj says:

    Cheap credit for auto loans is less about the Fed and more about Treasury/Congress. Remember that the US govt remains the majority owner of Ally financial (previously GMAC). Here’s relevant data from Ally’s 2011 Annual Report:
    “We financed 79% and 65% of GM’s and Chrysler’s North American dealer inventory, respectively, during 2011, and 78% of GM’s international dealer inventory in countries where GM operates and we provide dealer inventory financing, excluding China.”
    This cheap financing represents on-going hidden bailouts for the auto sector:
    http://bubblesandbusts.blogspot.com/2012/11/hidden-bailouts-for-gm-and-chrysler.html

  3. ConscienceofaConservative says:

    Back before the housing melt-down the Fed sat silent in the face of deteriorating lending standards and now we see the same thing with auto loans. Are we so desperate for a Detroit revival that we don’t care if we are creating a bubble in auto loans, and worse saddling buyers with above 100% ltv auto loans to purchase cars above their means?