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Consumer credit growth slows in September
Total consumer credit rose 6.5 percent at a seasonally adjusted, annualized rate in September and is up 7.9 percent compared to a year ago. Revolving credit – primarily credit cards – rose 8.7 percent and is up 5.8 percent compared to September 2021. Non-revolving credit – primarily auto loans and education loans – rose 5.7 percent during the month and is up 5.8 percent from a year ago.
“Revolving debt is still growing at a rapid clip, but September’s growth was the second slowest in the past year,” said NAFCU Chief Economist and Vice President of Research Curt Long in the latest Macro Data Flash report. “Higher rates are discouraging households from taking on debt, while lenders are showing greater reluctance to extend credit in the face of a potential recession in 2023.
"In the Federal Reserve’s latest Senior Loan Officer Opinion Survey, ‘moderate net shares of banks reported tightening lending standards for credit card loans and other consumer loans.’ Meanwhile, non-revolving debt has been growing at a more modest pace, but it accelerated somewhat in September," added Long.
Total consumer credit for credit unions rose 1.8 percent, on a seasonally adjusted basis, in September, compared to a 0.3 percent gain for banks and 0.2 percent increase for financial companies. From a year prior, total consumer credit at credit unions rose 17.5 percent, while banks experienced a 12.3 percent gain and financial companies fell 1.1 percent.
Over the past 12 months, credit unions’ share of the market rose 1.1 percentage points to 13.1 percent. Banks’ share rose 1.6 percentage points to 41.8 percent, and financial companies' share fell 1.1 percentage points to 12.2 percent.
"With auto production beginning to improve, that segment looks likely to continue to grow steadily," concluded Long. “NAFCU expects consumer credit to keep expanding in the fourth quarter as households tap available credit during the holiday shopping season, but growth is likely to slow due to tighter credit provision.”
For more up-to-date economic insights from NAFCU's award-winning research team, view NAFCU's Macro Data Flash reports.