Consumer Credit Growth Beats Expectations

Wells Fargo Research Team Wells Fargo

Consumer credit exceeded expectations in October with a $20.5 billion gain. Revolving and nonrevolving credit boosted the headline figure and provide further evidence in support of a confident consumer.

Borrowing Remains Healthy

Consumer credit rose $20.5B in October, besting the consensus expectation which called for a $17.0B increase. The headline figure was supported by solid growth in both nonrevolving and revolving credit.
Nonrevolving credit jumped $12.2B and is up 5.3 percent from a year-ago. Revolving credit increased a smaller $8.3B but is up an impressive 9.9 percent year over year.

Soft Descent

Total consumer credit growth continues to moderate, a phenomenon that is partially attributable to the high level of outstanding consumer credit.
Charge-off rates at commercial banks continue to trend upward, a fairly predictable event in the face of rising interest rates. We expect this relationship to continue as the Fed prepares to raise the funds rate next week and continue to tighten policy in 2018.

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Wells Fargo Research Team

Wells Fargo

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