Consumer credit data from the Federal Reserve splits into two categories: revolving (primarily credit cards) and non-revolving (auto loans, student loans, personal loans). The distinction matters because they tell you different things about household behavior.
Revolving credit growth tends to accelerate when consumers are stretching to maintain spending beyond their income growth. In isolation, that is not necessarily a problem. In context, when revolving credit is expanding at 8-10% annually while real wage growth sits at 1-2%, households are borrowing to cover the gap. That gap has a shelf life.
The total consumer credit outstanding in the US surpassed $5 trillion. That number means little by itself, but the rate of change tells a story. When consumer credit growth decelerates sharply, it often precedes or coincides with spending pullbacks. Credit card delinquency rates add another dimension. Rising delinquencies while credit is still expanding suggests households are not just borrowing more but struggling to service existing debt.
Auto loan data has become particularly informative. Average loan terms have stretched beyond 70 months, and average transaction prices have climbed significantly. When you combine longer terms with higher prices, the monthly payment stays manageable, but the total cost and the negative equity risk increase. Negative equity in auto loans constrains future purchasing decisions and can trigger cascading effects on consumer behavior.
For market participants, consumer credit data serves as a coincident-to-leading indicator of consumer spending, which represents roughly 70% of US GDP. When credit growth is strong and delinquencies are low, the consumer-driven economy has fuel. When credit growth slows and delinquencies rise, the engine is losing power.
The credit card charge-off rate is worth tracking separately. Major bank charge-offs tend to rise before recessions and peak during them. The current trend in charge-offs provides a real-time read on household financial stress that shows up before it manifests in aggregate spending data.
One pattern that has repeated across cycles: credit card balances tend to peak a few quarters before recessions as consumers make a final push to maintain spending, then drop as spending is curtailed and some debts are charged off. Watching for that peak and rollover gives you a data-driven signal rather than relying on vibes about how the consumer is doing.
The Fed releases consumer credit data monthly with about a five-week lag. It is not the most timely data, but it captures dynamics that higher-frequency data misses. Combining it with weekly credit card spending data from banks provides a more complete picture of the consumer economy in near-real-time.