U.S. consumer credit grows in July, revolving credit likely to reach new high in early 2018

U.S. consumer credit jumps at the beginning of the third quarter. Consumer credit grew USD 18.5 billion in July. Despite a continued deceleration in revolving credit growth, an uptick in nonrevolving credit growth permitted total consumer credit to grow 5.9 percent year-on-year.

Consumer credit growth exceeded expectations in July with a USD 15.9 billion rise in nonrevolving credit in the first month of the third quarter. Revolving credit added an addition of USD 2.6 billion. Revolving credit continues to be just below its pre-recession peak while nonrevolving credit continues to set a record each month. With consumer sentiment remaining solid, there is a good possibility that revolving credit would reach a new high in early 2018, noted Wells Fargo in a research report.

On a year-on-year basis, auto loan debt rose 5.5 percent in the second quarter. This marks a continued slowdown that has been a trend since mid-2015. The July Senior Loan Officer Opinion Survey recorded a fall in auto loan demand and a rise in the percentage of bank tightening standards for auto loans, so the private market does seem to be adjusting to credit concerns, added Wells Fargo.

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