U.S. consumer credit likely to have risen in September

The Federal Reserve’s consumer credit report for the month of September is set to be released this week. This indicator, in recent times, has garnered attention as the business cycle continues to lengthen. Possible weakness in consumer purchases on credit in rising rates environment might hint at a greater economic slowdown around the corner, noted Wells Fargo in a research report.

Consumer credit growth in August had come below expectations, with noticeable weakness in non-revolving credit. Non-revolving credit has risen 3.2 percent year-on-year, compared to revolving credit which is up 7 percent year-on-year. Revolving credit continues to be slightly below its pre-recession peak while non-revolving credit continues to set new record every month. Both series are expected to gradually climb from here.

“If the Fed continues to raise rates in the ‘slow and steady’ manner in which they have over the past year, then a sharp uptick in consumer debt delinquencies will likely not occur, all else equal”, added Wells Fargo.

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