Consumer Credit Surged to a 4 Month High

Consumer credit jumped to $13.5B in March (consensus +$4B), or a 6.7% annualized pace. Consumer credit covers lending to individuals that is not collateralized by real-estate. The growth was relatively evenly split between revolving and non-revolving debt in dollar terms, but credit card debt increased at a 9.2% annualized rate, while non-revolving (auto loans) debt increased at a 5.2% annualized rate. For comparison, in the fourth quarter of last year, consumer credit grew at a 4.1% annualized pace, with revolving debt 8.4% annualized and non-revolving growing at a 1.7 annualized rate.

Credit card issuers are benefiting from consumers inability to continue tapping home equity, which is causing them to switch to higher cost revolving debt. MasterCard saw its first quarter profit climb 70 percent to a new record, and the number of transactions increased a substantial 19%.