The Bounce Back in Consumer Credit

By at 8 February, 2022, 10:31 am

by Raymond J. Keating –

In its latest report on consumer credit outstanding, the Federal Reserve reported that consumer credit continued to expand through the end of 2021.


● Revolving credit (mainly, credit cards) increased by 2.4 percent (at an annualized, seasonally adjusted rate) in December and by 10.9 percent in the fourth quarter.

● Nonrevolving credit (which includes “motor vehicle loans and all other loans not included in revolving credit, such as loans for mobile homes, education, boats, trailers, or vacations,” and not secured by real estate) grew by 6.0 percent in December and by 5.4 percent in the fourth quarter.

● Total consumer credit increased by 5.1 percent in December and by 6.6 percent in the fourth quarter.

Perhaps most striking in this report is the annual data. In particular, the expansion in consumer credit outstanding in 2021, after a notable decline in 2020, the year, of course, in which the pandemic hit.

● Total consumer credit outstanding had declined by 0.3 percent in 2020, with a decline of 11.2 percent in revolving credit. Although, nonrevolving credit actually grew by 3.6 percent.

● As for 2021, total consumer credit increased by 5.9 percent, including revolving credit up by 6.6 percent and nonrevolving credit by 5.7 percent.

Total and nonrevolving consumer credit outstanding at the end of 2021 were each ahead of where they were at the end of 2019, while revolving credit remained below the 2019 level.

Source: Federal Reserve Bank of St. Louis, FRED

The story here is noteworthy.

While consumer borrowing took a hit in 2020 with the pandemic, it bounced back quickly in 2021. That can speak to several factors, from consumers regaining confidence to others perhaps borrowing to keep things afloat during difficult times.

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



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