US Consumer Lending Hits Highs | So Good News


American consumers have more debt than ever. The recently released Federal Reserve Consumer Credit-G.19 report shows that US consumer credit is at historic lows; Outstanding consumer credit is now at $4.7 trillion. In August, consumer credit rose at an annualized rate of 8.3 percent. The initial increase in July was 6.%.

Current levels of consumer credit show that the Federal Reserve’s rate hikes have not reduced consumer borrowing. While consumer debt declined in the years immediately following the 2007 – 2009 financial crisis, from the second quarter of 2011 to the second quarter of this year, consumer debt increased by 90%.

In August, nonperforming loans, which primarily consist of auto, student, and personal loans, rose an annualized 5.1 percent. This rate has not been changed since July.

The revolving credit, however, grew at an annual rate of 18.1 percent; Revolving credit includes credit cards, home equity lines of credit (HELOC), and personal and small business loans. Despite the late repayment and failure, so far it seems to be in control, my concern is that the rise in inflation, the revolving credit can be a big problem for American consumers, when their cost of borrowing increases. This problem will be exacerbated if unemployment starts to increase.

Also of concern should be the fact that while borrowing continues to rise, American savings have fallen sharply over the past two years. In January 2021, savings, defined as the amount of waste included, stood at 20%; today it is at 3.5%, a decrease of 470%. 3.5% is well below the average American savings rate of 8.95% from 1959 – 2022. The lowest savings rate since the National Bureau of Economics Research began collecting this data was 2.2%, seasonally adjusted, in July 2005.

After the pandemic began in 2020, Americans saving reached 33.80% in April 2020. The decrease in savings is mainly related to the opening of the economy since COVID, which has led to lending and investment.

Banks will make payments next week on October 14. Banks have to show that they have less income due to the volatility of the market and the decrease in bank income. In acquiring banks, the important thing to look at is the nature of the bank’s assets. Check to see if non-performing loans (NPLs) are rising and the amount of lost income. This data will give the market an indication of whether the level of consumer debt should be of concern.


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