Consumer Credit Increases Less Than Expected

Consumer credit came in well below expectations in September, up $9.5 following August's lower revised $17.8 billion. Revolving credit, reflecting credit card debt, fell $1.1 billion after falling a larger revised $2.2 billion previously, while non-revolving credit, where student loans and vehicle financing are tracked, rose $9.5 billion following August's $20.0 billion increase.

Seasonally adjusted revolving credit growth contracted at an annualized rate of 1.2 percent after falling 2.5 percent in August. Non-revolving credit growth slowed to an annualized rate of 4.2 percent in September from 7.9 percent previously.

For the third quarter, revolving credit growth slowed on a seasonally adjusted basis to an annualized rate of 2.2 percent following the second quarter's 5.2 percent pace, while non-revolving credit growth accelerated to 5.9 percent from 4.4 percent previously.

The monthly slowdown shows the consumer becoming more frugal, particularly in paying down credit card debt in the last two months, which is a negative for consumer spending and for retail sales but a positive for household financial health.