The headlines say consumer credit rate of annual growth declined from last month. Our analysis sees a negligible change in the rate of growth.
Analyst Opinion of the Consumer Credit Situation
There was little revision of the previous months’ data.
Not only does this data set suffer from backward revision (moderate to significant enough to change trends – such as this month), but the use of compounding (projecting monthly change as annual change) by the Federal Reserve to determine consumer credit growth rates exaggerates the volatility in this data. The total consumer credit unadjusted year-over-year growth in 2017 slowed steadily from 6.6% to 5.4% in December. The January growth was 5.3%.
Last month’s headline said:
Consumer credit increased at a seasonally adjusted annual rate of 7-3/4 percent during the fourth quarter. Revolving credit increased at an annual rate of 9-3/4 percent, while nonrevolving credit increased at an annual rate of 7 percent. In December, consumer credit increased at an annual rate of 5-3/4 percent.
This month’s headlines said:
In January, consumer credit increased at a seasonally adjusted annual rate of 4-1/4 percent. Revolving credit increased at an annual rate of 3/4 percent, while nonrevolving credit increased at an annual rate of 5-1/2 percent.
Unadjusted Consumer Credit Outstanding
Overall takeaways from this month’s data: