WASHINGTON–Newly released Fed data show the economy continues to rebound quickly from the coronavirus pandemic, with credit unions seeing an increasing share of the consumer credit market over one year earlier.
The Fed reported consumer credit outstanding increased at a rate of 10% in May (seasonally adjusted), including an 11.4% increase for revolving credit and a 9.5% increase for non-revolving credit.
According to the Fed, the former includes credit extended through credit cards, personal lines of credit and home equity lines of credit, while the latter includes auto loans and all other loans not included under revolving credit, including those for mobile homes, education, boats, trailers or vacations – secured or unsecured.
The Fed said the increase in May in total consumer credit outstanding is the largest monthly increase in the three-month period of March through May; in March, consumer credit expanded by only 5.5%, and in April only 5.7% (both are revised from original Fed releases).
In the first quarter of the year, the Fed reported consumer credit advanced by only 3.6%; in all of 2020, consumer credit declined by 0.3%, largely as a result of the coronavirus crisis.
‘Strong Gains’ Expected
“On a seasonally-adjusted basis, consumer credit grew at its strongest pace since December 2014, still primarily driven by auto and education loans,” said NAFCU Chief Economist and Vice President of Research Curt Long. “Revolving credit posted a significant gain, rising 11.4% after a tough year. The shortage in semiconductors to build new vehicles could slow down nonrevolving credit in the coming months, but that will resolve itself as supply stabilizes. Where consumer confidence and the labor market are improving, consumer credit is likely to follow, NAFCU added in its analysis, projecting strong gains in consumer credit through the year, particularly in revolving credit as consumers return to spending.
“Credit unions' portfolio of consumer credit was up 5.1% from a year earlier, compared to a 3.8% rise across all types of credit holders. Over the past 12 months, credit unions' share of the market rose 0.1 percentage points to 12.2%. Meanwhile, banks' share fell by 0.7 percentage points to 39.5%, and financial companies' share rose by 0.5 percentage points to 13.5%.”