Consumer Credit Drifts Lower in November 2010

The Federal Reserve released the November 2010 G.19 compilation of consumer credit outstanding with the following headline:

Consumer credit was little changed in November. Revolving credit decreased at an annual rate of 6-1/4 percent, and nonrevolving credit increased at an annual rate of 4-1/4 percent.

The headline uses seasonally adjusted data.  The majority of revolving credit is from credit cards, while nonrevolving credit includes automobile loans and all other loans not included in revolving credit, such as loans for mobile homes, education, boats, trailers, or vacations.

The Federal government continues to build its portfolio in nonrevolving credit adding over $30 billion in the last month alone.  The Federal government has no revolving credit holdings.

This year the Federal government has increased its credit portfolio by $129 billion.  Although not broken out, it is assumed this growth in due to student loans.  This months annualized increase is 13.8% – and without the government’s purchases, non-revolving credit would have declined.

Using unadjusted data, revolving credit actually grew – and Econintersect believes this increase was attributed to early holiday shopping (the Federal Reserve’s seasonal adjustment factors revolving credit declining).

Ignoring the government’s involvement in non-revolving credit, consumer credit contracted $197 billion this year- and contracted $68 billion including their portfolio.

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