US Consumer Credit Jumps to Decade High

U.S. consumer credit soared in July, posting its biggest jump since November 2001, driven in part by demand for auto loans and student borrowings.

Total consumer credit increased $26.01 billion to $3.24 trillion in July, the Federal Reserve said on Monday. June’s consumer credit figure was revised up to show an $18.81 billion increase from $17.26 billion.

Economists polled by Reuters had expected consumer credit to increase $17.35 billion in July.

 
Chris Low, chief economist at FTN Financial, said the credit growth is being driven by auto loans, though he added that signs of loose standards and spikes in default rates are showing.

“The only thing we have to worry about is there is excessive risk-taking in the auto sector,” said Low. “But it’s still a good thing for the economy at least in the short term. Car sales are back to where they were before the financial crisis, which is remarkable.”

The previous record was an increase of around $28 billion recorded in November 2001, according to a Fed spokesman. That occurred shortly after the Sept. 11, 2001 attacks when big automakers were offering zero-percent financing and other incentives to lure consumers back to their showrooms.

via Reuters

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.