Revolving credit contracts again, nonrevolving at new high

Consumer Credit outstanding in Jan rose for a 4th straight month by $5b, above expectations of a gain of $3.5b but Dec was revised down to show a rise of $4.1b vs the initial reading of $6.1b. The breakdown though shows a very mixed picture as revolving (mostly credit cards) credit outstanding fell for the 28th month in the past 29. Thus, the recent monthly gains have been led by the non revolving category (mostly auto loans and student loans), especially as vehicle sales have improved. In the aggregate, revolving credit outstanding fell to the lowest since Sept ’04 seasonally adjusted while non revolving loans outstanding rose to an all time record high. From a deleveraging standpoint, consumers have cut back from borrowing in the aggregate, specifically with much forced deleveraging in the mortgage side (not included in this data), but corporate debt is at a record high and we all know where government debt stands.

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