Consumer Credit Surges
U.S. Consumer Credit Rises $18 Billion in July, Exceeding Economic Forecasts
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Key Points
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Economists surveyed by Bloomberg had expected consumer credit to rise by $11.3 billion, making the $18.1 billion increase substantially stronger than forecast.
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The Federal Reserve’s G.19 measure excludes mortgage debt and covers roughly $5.17 trillion in non-mortgage borrowing, including about $1.35 trillion in revolving credit and $3.82 trillion in non-revolving credit.
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Including mortgages, total U.S. household debt was approximately $18.25 trillion in the latest Equifax data, up 2.1% from a year earlier.
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On a seasonally adjusted annualized basis, total consumer credit grew 4.2% in July; revolving credit rose at a 2.5% rate, while non-revolving credit increased at a 4.8% rate.
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Consumer spending represents roughly two-thirds of U.S. economic activity, making the credit figures a closely watched indicator of potential economic growth; year-over-year consumer-credit growth remained in the low-to-mid single digits, described as historically manageable.
U.S. consumer credit surged by $18.1 billion in July, blowing past economist forecasts of $11.3 billion and signaling robust household borrowing. Briefs reported the gain accelerated sharply from June's revised $14.6 billion increase, driven mainly by auto loans and student debt — the strongest non-revolving credit growth in three years. The data shows consumers remain willing to borrow, even as total household debt climbs toward record highs.
The resilience reflects a consumer sector still powering two-thirds of U.S. economic activity, though analysts are watching closely as household borrowing mounts. Credit card debt hit a new all-time high of $1.357 trillion in July, Zero Hedge noted, raising questions about sustainability. Yet repayment trends remain stable, suggesting households are managing their obligations despite elevated debt loads.
Non-Revolving Credit Powers Past Forecasts
Auto loans and student debt led July's credit surge, posting their best performance in three years. Non-revolving credit — the segment excluding credit cards — jumped at a 4.8% annualized rate, far outpacing the 2.5% pace of revolving credit. Briefs highlighted that this strength signals households remain confident enough to take on major purchases and education costs.
The Federal Reserve's G.19 measure tracks roughly $5.17 trillion in non-mortgage borrowing, with non-revolving debt representing $3.82 trillion and revolving credit at $1.35 trillion. Zero Hedge reported that while revolving credit also rose in July, it grew at a more modest pace, suggesting consumers are tapping auto and student loans more aggressively than credit cards.
Credit Card Debt Hits Record Territory
Revolving credit, including credit card balances, climbed to a fresh all-time high of $1.357 trillion in July. Zero Hedge underscored this milestone as a warning sign for some analysts tracking consumer financial health. On an annualized basis, revolving credit grew at just 2.5%, a slower rate than non-revolving segments, yet the absolute level reached unprecedented territory.
The credit card surge reflects both higher spending and stubborn inflation on everyday goods. Consumer card spending reached a 13-month high in August, with entertainment and travel leading gains, according to Credit Connect. Still, year-over-year credit growth remains in the low-to-mid single digits, which analysts describe as historically manageable despite record headline debt totals.
Total Household Debt Climbs Toward $18.25 Trillion
When mortgages are included, U.S. household debt reached roughly $18.25 trillion in the latest data, up 2.1% year-over-year. This total dwarfs non-mortgage consumer credit but represents a broader measure of what American families owe. The 2.1% annual gain signals debt is growing faster than incomes for many households, a trend that bears watching.
Despite rising debt levels, repayment trends have remained stable or improved, offering comfort to those tracking financial stress risks. Analysts point to this stability as evidence the consumer sector can sustain current borrowing levels without immediate risk of distress. Still, the convergence of record credit card debt, strong auto lending, and climbing total household obligations leaves little room for income shocks or interest rate surprises.
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