Consumer credit rose in March, a bit of unexpected new. According to the Federal Reserve, the figure “increased at an annual rate of 1 percent in March 2010.” The total of revolving and non-revolving credit was $2451.1 billion at the end of the month. The rate declines sharply last year. The drop during that period was particularly swift. By quarter, the figures based on percent annual change were -3.1. -4.8, -3.1, -6.1
Most of the credit was held by commercial banks–$1154.9 billion followed by finance companies at $540.7 billion. If interest rates rise at the pace that of what is charged on the purchase of new cars is, then demand for loans could drop again quickly as consumers avoid the increase in what they must pay for money. Auto loan interest rose to 4.25% in March. Last year, the average was 3.82%. Months to maturity remained above 62 meaning that auto buyers do not have the capital to pay large sums per month to own a vehicle. That, by itself, shows how much the consumer is stretched.
Douglas A. McIntyre
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