One month after the May consumer credit posting a shocking decline - the first since late 2024 - driven by a plunge in revolving credit, things are mostly back to normal, with the Fed reporting in its latest G.19 report that in June, US consumer credit posted a healthy $14.17BN bounce - a full reversal of the May drop of $1.1 billion - and above the $11.9 billion median estimate.
The rebound was driven by a sizable reversal in last month's drop in revolving credit (i.e., credit card debt), as consumer resumed buying on credit to the tune of $6.7BN...
... bringing the total amount of outstanding credit card debt to $1.351 trillion, just $1 billion away from the all time high set in October 2024.
Meanwhile, non-revolving credit rose by its slow and steady monthly pace of $7.4 billion, lifting the total amount of student and auto loans to a new record high of $3.816 trillion.
What is interesting, is that while auto loans have barely budged since late 2023, staying around 1.6 trillion for nearly three years, and hitting a record $1.571 trillion at the end of June, student loans have resumed their ascent, and after a modest decline in late 2023, student loans are once again at all time highs although in June we saw a tiny decline of $4.5 billion.
Finally for those keeping tabs, after a modest decline in the previous two quarter, the average interest rate on credit card accounts assessed interest rose to 22.15%...
... a level last seen three years ago, when the Fed rates was almost 2% higher, which confirms our long-running observation that credit card rates go up but they never go down.
One final observation: after a period of about 6 years when the average amount financed by auto loans was around $25,000 (from 2008 to 2014), this amount has grown dramatically, and in Q1 2026 it hit a new record high of $42,500, the highest on record. Just in case there was confusion what is behind the relentless increase in car prices...
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.