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Consumer Credit, Getting Back to Borrowing

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By Douglas A. McIntyre Updated Published
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You might not believe it, but the Federal Reserve noted that January’s consumer credit rose by 2.4% in January by $4.96 billion to $2.456 trillion.  This marks the first time we have seen a gain in about a year.  January 2009 was the last gain seen.  Dow Jones was calling for another drop of about $4 billion.  Bloomberg also had expected a drop of $4 billion.  The gains here are far from being universal.  But things have to start somewhere.

Here is the issue at hand.  There was a $6.6 billion rise in non-revolving credit, which accounts for things like car loans, mobile homes, boats, vacations, education, and the like. The consumers’ revolving credit, which is effectively credit cards, did decline again.  The revolving credit was down $1.7 billion in January, a fraction of the near-$10 billion seen in December.

Some will point out that this is not as good of news because it is not revolving credit.  At the end of the day, a recovery has to start somewhere.  Consumers are still hesitating from loading up their credit cards, a trend we would expect to continue far beyond the recession even if incremental additions are seen in the coming months.

As a reminder, consumer credit does exclude housing and other secured loans for real estate and property. Before celebrating too much here, consider where we were a year ago.

JON C. OGG

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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