You might not believe it, but the Federal Reserve noted that January’s consumer credit rose by 2.4% in January by $4.96 billion to $2.456 trillion. This marks the first time we have seen a gain in about a year. January 2009 was the last gain seen. Dow Jones was calling for another drop of about $4 billion. Bloomberg also had expected a drop of $4 billion. The gains here are far from being universal. But things have to start somewhere.
Here is the issue at hand. There was a $6.6 billion rise in non-revolving credit, which accounts for things like car loans, mobile homes, boats, vacations, education, and the like. The consumers’ revolving credit, which is effectively credit cards, did decline again. The revolving credit was down $1.7 billion in January, a fraction of the near-$10 billion seen in December.
Some will point out that this is not as good of news because it is not revolving credit. At the end of the day, a recovery has to start somewhere. Consumers are still hesitating from loading up their credit cards, a trend we would expect to continue far beyond the recession even if incremental additions are seen in the coming months.
As a reminder, consumer credit does exclude housing and other secured loans for real estate and property. Before celebrating too much here, consider where we were a year ago.
JON C. OGG
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