U.S. consumer revolving debt for July, mostly credit card debt (95%), remained above the $1 trillion level for the fifth consecutive quarter. The year-on-year (YOY) change edged slightly upward in July. Consumer revolving credit increased at an 1.5% annual rate of growth in July, compared to a revised -1.4% annual rate in June and a revised +9.0% annual rate in May.
Non-revolving credit increased at an annual rate of +6.4% in July.
Total revolving credit for July posted at $1036.6 billion, compared to a revised $1035.4 billion in June, and a revised $1036.6 billion in May, according to the Federal Reserve.
On a quarterly basis U.S. revolving consumer credit is growing by +4.5% YOY to a revised $1035.4 billion for 2Q/18, compared to a revised $1028.2 billion for 1Q/18, and $1028.5 billion for 4Q/17.
Total consumer credit, at the end of July, stood at $3918.0 billion.
U.S. CONSUMER REVOLVING CREDIT
4Q/15: $938.8 billion
1Q/16: $953.2 billion
2Q/16: $968.1 billion
3Q/16: $980.7 billion
4Q/16: $969.6 billion
1Q/17: $979.9 billion
2Q/17: $991.5 billion
3Q/17: $1003.5 billion
4Q/17: $1028.5 billion
1Q/18: $1028.5 billion
2Q/18: $1038.8 billion
The Financial Obligations Ratio (FOR) and the Debt Service Ratio (DSR)
According to the Federal Reserve, on a seasonally adjusted basis, the FOR slightly decreased to 15.75% in 1Q/18, compared to 15.77% in 1Q/17 and 15.52% in 1Q/16. The DSR slipped down to 10.21% in the first quarter of this year, compared to 10.23%% in 1Q/17, and 10.04% in 1Q/16.
The FOR peaked at 18.13% in the fourth quarter of 2007. Since peaking at 13.18% in the fourth quarter of 2007, the beginning of the Great Recession, the DSR has declined steadily since, dipping into single digits for the first time in the fourth quarter of 2012 (9.87%).
Consumers of late have been taking on more debt, but the growth rate is down about one-third of the annual growth rate of the prior year, according to CardData. U.S. revolving consumer credit is now growing at a 4.0% year-on-year (YOY) or annual rate, compared to a 6.1% annual growth rate of the prior year.
According to the Federal Reserve, revolving consumer credit outstandings (mostly credit card) stood at $1028.5 billion for end-of-year (EOY) 2017, compared to $969.4 billion for EOY 2016, and $907.9 billion for EOY 2015. At the end of the first quarter of 2018, revolving consumer credit stood at $1038.8 billion.
The household DSR is an estimate of the ratio of debt payments to disposable personal income. Debt payments consist of the estimated required payments on outstanding mortgage and consumer debt.
The Financial Obligations Ratio is a broader measure than the Debt Service Ratio. It includes rent payments on tenant-occupied property, auto lease payments, homeowners’ insurance, and property tax payments.