US Consumer Credit Growth Slows To Weakest In 7 Months

Following last month's notable slowdown in the growth of consumer credit (to its weakest since Sept '17) expectations were for a bounce but April confirmed search trend data and saw a further slowdown.

As Bianco Research noted ahead of this data, consumer spending has been rolling over into the spring of 2018. The next chart looks at changes in searches for apparel, home improvement, autos, furniture, and more. The dwindling popularity of these types of search has reached the fastest pace of decline since 2009.

Credit searches are also falling, led by home financing. We have offered analysis of credit card delinquencies, which we expect to climb across the top 100 banks to 3.7% over the next year.

And so, against expectations for a $14.00bn rise in Consumer Credit (from $11.62bn), credit growth slowed to just $9.262bn, the weakest growth since September 2017.

After crashing to 5 years lows in March, revolving debt rebounded by 2.263bn in April, but non-revolving debt growth slowed dramatically from adding $13.38bn in March to adding just $6.999bn (to its weakest since Sept 2017)...

 

The big question - after 4 months of weakness in revolving credit and the notable slowdown in aggregate consumer credit growth: will this be a momentary blip or a lasting shift in trend?

The results are consistent with first-quarter data that showed household spending cooled following a strong run of gains. All that dis-saving (and credit-card-debt engorgement) managed to spike consumer confidence to near record highs...

It also confirms that with the US personal savings level once again near all time lows, and with households no deleveraging on their credit cards, the second quarter is about to get very ugly for the economy which is 70% driven by consumer spending. 

Comments

davatankool Thu, 06/07/2018 - 15:13 Permalink

For those who are not familiar with this data:

Consumer Credit measures the change in the total value of outstanding consumer credit that requires installment payments. It is closely correlated with consumer spending and confidence. The figure can be volatile as it often subject to sizable revisions.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

Quivering Lip Thu, 06/07/2018 - 15:17 Permalink

No worries, unemployment which used to be a fake stat is now real. Once the trade war really kicks in and those $30 an hour jobs with premium healthcare kicks in the people will be spending and investing like drunken sailors.

OH10DESERTER Thu, 06/07/2018 - 15:24 Permalink

I'm not sure if this is bad or good in ZH doom porn.  Consumers taking more credit = overleveraged,  consumers taking less credit = tapped out consumer....it's just digits, so I say fuck it.  Party on!

Chief Joesph Thu, 06/07/2018 - 15:29 Permalink

The last paragraph says it all: ".... US personal savings level once again near all time lows, and with households no deleveraging on their credit cards, the second quarter is about to get very ugly for the economy which is 70% driven by consumer spending".  Yeah, we are not a manufacturing economy anymore, its mostly all consumer driven now.

But talk about things getting ugly.  If the credit card lending institutions start calling in those credit cards, not only will the economy drop like a rock,  you can bet homicides and burglaries will go up drastically overnight. You could easily wake up one morning and think you are in Venezuela.

MonsterSchmuck Thu, 06/07/2018 - 15:40 Permalink

Dysfunctional economies. What’s good for the people is bad for business. Ass backwards. When consumer credit is diminishing it’s ONlY a good thing for whatever reasons. Get off the crack dumb fuckers. 

hola dos cola Thu, 06/07/2018 - 15:45 Permalink

Happy driving season. Go the extra mile(s). Don't hold back and draw your debtcards. Sorry you didn't get to enjoy the tax cuts,(and hope you didn't take credit against those on the expectation to be a future beneficiary), but you can pay for them! And for the free F-35's to please the POTUS' BFF-prince. MAGA.

LiberateUS Thu, 06/07/2018 - 15:55 Permalink

In past 6 months have received the most promotional credit card and consumer loan offers of my life, despite no change in my income or credit quality. Big banks going bat-shit crazy. Eerie feeling similar to 2006/2007.