Weekly Market Insight . Total Consumer Credit; Excluding Mortgages, Seasonally Adjusted . 10/10/11

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Total Consumer Credit
Excluding Mortgages, Seasonally Adjusted
October 10, 2011
Source: Federal Reserve, Grubb & Ellis
After rising for 10 consecutive months, consumers took a breather in August as the amount of credit outstanding dipped by $9.5 billion or 0.4 percent, ending the month at $2.44 trillion. Consumer credit has two main components: nonrevolving credit, which includes loans for automobiles, mobile homes, education and a few other categories, and revolving credit, primarily credit card loans. Nonrevolving credit, which accounts for slightly over two-thirds of the total, had expanded for 14 consecutive months before August. Revolving loan balances hit a fresh cyclical low in August as households and lenders continue to exercise caution in using and extending credit, respectively. Mortgage debt on one-to-four-family residences, which is not counted as consumer credit (and is not included in the chart) continues to decline, falling $54 billion in the second quarter to $10.4 trillion. Overall, consumers continue to deleverage but with some differences by type of loan. Mortgage debt has been falling steadily, nonrevolving credit has been rising until recently, and revolving credit has moved little this year. Consumer credit data are volatile and subject to revision, but the August decline may not be a fluke as a number of economic indicators came in weaker than expected during the month. Lack of growth in revolving credit is one factor holding back retail sales, which in turn is keeping a lid on retail leasing activity. On the other hand, the ongoing decline in outstanding mortgages is a bullish sign for apartment leasing.
Robert Bach, Senior Vice President, Chief Economist, has 30 years of professional experience in real estate market research, consulting and city planning. His commentary on the real estate markets is provided here on a weekly basis.

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Robert Bach
Senior Vice President, Chief Economist

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About CRE Northwest

Specialist in office & investment real estate in Seattle & the Eastside
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