Consumer Credit Growth Slows in January

Consumer credit expanded by $13.9B in January, undershooting the consensus which called for an expansion of $17.7B. Nonrevolving credit accounted for nearly all of the consumer credit growth to begin the year.

Revolving Credit Was Practically Flat

• Revolving credit in the consumer space, which is primarily made up of credit card loans, increased just $701K in January. The underwhelming increase was the smallest gain since February 2015. The soft revolving number should not come as a complete surprise as retail sales in January dropped 0.3 percent.

• It is relatively clear that there are some seasonal factors at play. Revolving credit growth in January has consistently fell below other months since the recovery from the Great Recession.

Where Does the Consumer Go From Here?

• Nonrevolving credit increased $13.2B on the month, a healthy number, largely in line with its recent average monthly gain.

• We remain positive on the consumer this year, even though the first look at consumption in January has not been very encouraging. As we have noted previously, the biggest risk for consumers, as well as for the U.S. economy this year, is higher inflation, which has the potential to cut into the purchasing power of income and push consumers to the sidelines.

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