The numbers: Total consumer credit rose $5.2 billion in October, down from a $12.2 billion gain in the prior month, the Federal Reserve said Thursday. That translates into credit growth at a 1.2% annual rate, down from a 3% rate in the prior month.
Economists had been expecting a $9.1 billion gain in consumer credit in October, according to the Wall Street Journal forecast.
Key data: Revolving credit, like credit cards, slowed to a 2.7% rate in October after a 4.1% growth rate in the prior month.
Nonrevolving credit, typically auto and student loans, rose at 0.7% rate after a 2.5% rate in the prior month. This category of credit is typically much less volatile. The Fed’s data does not include mortgage loans, which is the largest category of household debt.
Big picture: Tighter standards and higher rates are beginning to weigh on credit growth, said Michael Pearce, U.S. economist at Oxford Economics.
“While much has been made of the recent increase in credit card use, credit card debt as a share of household incomes is lower than on the eve of the pandemic,” Pearce said, in a note to clients.
What are they saying? “The clear downward trend in consumer credit should resume over the next few months, as higher rates make people less willing to take on additional debt,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Market reaction: Stocks
DJIA
SPX
were higher in afternoon trading while the 10-year Treasury yield
BX:TMUBMUSD10Y
rose to 4.14%.
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