The Lockdowns Have Just Spawned Another Epidemic, But Not The One You Think


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Total consumer credit outstanding rose by $35.3 billion to $4,279.3 billion in May (see top of first chart), a 0.8 percent increase from the prior month. From a year ago, total consumer credit is up 3.7 percent (see bottom of first chart).

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Within the total, revolving credit, primarily credit cards, added $9.2 billion (see second chart) to $974.6 billion, a 1.0 percent gain for the month but still a 2.2 percent decline over the past year. Nonrevolving credit added $26.1 billion (see second chart) to come in at $3,304.7 billion, a 0.8 percent gain for the month and a 5.6 percent gain from a year ago. Revolving credit made up 22.8 percent of total consumer credit while nonrevolving accounted for 77.2 percent.

Nonrevolving credit has been growing rapidly over the past decade and a half, driven primarily by student loans and motor vehicle loans. As of the end of the first quarter, student loans totaled $1,730.0 billion, or 53.1 percent of nonrevolving credit, and auto loans totaled $1,236.3 billion, or 38.0 percent of nonrevolving debt. Together, they account for 91.1 percent of nonrevolving debt outstanding and 70.2 percent of total consumer credit. Revolving consumer credit was just 22.8 percent of total consumer credit as of May 2021.

Total consumer credit jumped in May on gains in revolving credit and nonrevolving credit. The gain in revolving credit goes against the recent trend while nonrevolving credit continued a strong growth trend.



* This article was originally published here

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