PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Economic Fact of the Week: Revolving Consumer Credit Lined Up with Retail Sales in November

By at 9 January, 2020, 9:04 am

by Raymond J. Keating-

The latest report from the Federal Reserve on consumer credit for November lines up with what we saw in the Census Bureau’s retail sales report for the month. As SBE Council noted in an analysis about retail sales for November 2019, they were softer than expected. Likewise, consumer credit was mixed, with revolving credit actually declining in November.

Specifically, total consumer credit (seasonally adjusted, annualized and excluding loans secured by real estate) grew by 3.6 percent in November. Breaking those numbers down, growth in nonrevolving credit (such as motor vehicle, education, boat and vacation loans) came in at 5.8 percent. But revolving credit (mainly, credit cards) declined by 2.7 percent.

Source: Federal Bank of St. Louis, FRED

As noted in the above chart, it’s not unusual to see an up-and-down pattern in revolving credit outstanding month-to-month, even as the general trend is up. And on January 16, we’ll get the initial estimate on retail sales for December – to gain a full picture of the performance of the Christmas season.

For good measure, the consumer was the primary source of growth in the second and third quarters of 2019, given the decline in business investment and trade. Again, when we get the first estimate of fourth quarter 2019 GDP growth at the end of this month, the consumer’s performance again will matter a great deal.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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