Consumer Credit Growth Falls Way Short of Expectations

In the first glimpse that consumers might be concerned about the overall economy, consumer credit in the US saw a much smaller than predicted increase, according to the latest data from the Federal Reserve

  • Total consumer credit rose just $1.5 billion in December, up just 0.4% from the prior month and the smallest monthly increase since the 15 billion drop in August.

Swing & A Miss. Economists had projected an increase over 10 times larger of $16B.

Down Across The Board. With a topline slowdown this big it is not surprising that both revolving and nonrevolving debt growth was anemic in December.

  • Revolving debt rose to 1.314 trillion in December, up just 0.8% from the prior month and the smallest increase since September’s 0.1% decline.
  • Nonrevolving debt rose to 3.696 trillion in December, up just 0.1% from the prior month and the smallest rise since the 0.9% drop in August.

BOTTOM LINE: All the data has been pointing to an economy holding strong as we enter 2024. This could be the first data point that shows consumers are really as pessimistic as some of these polls have shown. If retail sales next week also surprises to the downside that could be bad sign for the economy in Q1 of 2024.