Who said borrowing is dead?  We have now seen two consecutive months of rising credit in America.  While September consumer credit was revised to a gain of $1.2 billion rather than a gain of $2.1 billion, we have just seen the October data from the Federal Reserve show that consumer credit outstanding rose 1.7% on a seasonally adjusted basis.  The increase was $3.4 billion for a tally of roughly $2.4 trillion.  Both Dow Jones and Bloomberg were looking for a $2 billion decline.

We had losses for literally nineteen months before the change.  The jump is not all in credit cards as some is attributed to non-revolving credit and student loans.

Revolving credit, i.e. credit cards and other renewing credit, did fall as the economists were expecting.  The October shrinkage was another $5.6 billion to $800.5 billion.  Credit card borrowing has continued to shrink despite this overall credit growth.

Non-revolving credit, i.e. auto loans and student loans, was up almost 7% by $9 billion to about $1.6 trillion.

This is still a story that remains a “glass half-empty” in the description.  Just keep in mind that there is a lag here as this is October data rather than November data.  Much of it may have already changed as consumers are gearing up for the holidays.

The flip side to a ‘half-empty’ argument is that maybe this just implies that Americans are much more frugal in their credit card spending habits.  That is a trend that does not exactly lead to a robust consumer spending economy, but it makes for healthier finances of Joe Public.

JON C. OGG

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