Chart of the Day: Consumer Credit Rises by Most in 46 Months

The Federal Reserve released a surprising report late Friday that's sure to be overshadowed by July's unemployment numbers. The central bank says that U.S. consumer credit rose by 7.7%. This isn't just the most in nearly four years, it's by far the most since mid-2008. How did this happen?

Here's the chart:

consumer credit 2011-06.png

This is total credit, but if you split it up between revolving (credit cards) and non-revolving (auto loans, student loans, etc.), then you see similar results. They rose by 7.9% and 7.6%, respectively in June. In the case of credit cards, this is particularly surprising. May marked just the second time in 34 months credit card balances had risen. And now in June, they soared nearly 8%.

These statistics look even stranger in light of what we know about June: nominal consumer spending declined (though inflation-adjusted spending was about flat). If consumers spent less money, how did they manage to drive up their credit balances by so much?

I'm puzzled by this one. Are Americans hoarding cash and taking out more consumer loans while boosting their credit card balances? There's no good explanation for why this might be happening. Incomes actually also rose in June and prices fell, so they aren't being squeezed harder either.

The sudden jump in consumer credit in June is a pretty perplexing development. Anyone with any theories of what's going on here, please share in the comments!

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

Never Tell People How Old They Look

Age discrimination affects us all. Who cares about youth? James Hamblin turns to his colleague Jeffrey Goldberg for advice.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

Never Tell People How Old They Look

Age discrimination affects us all. James Hamblin turns to a colleague for advice.

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

Video

Pittsburgh: 'Better Than You Thought'

How Steel City became a bikeable, walkable paradise

Video

A Four-Dimensional Tour of Boston

In this groundbreaking video, time moves at multiple speeds within a single frame.

Video

Who Made Pop Music So Repetitive? You Did.

If pop music is too homogenous, that's because listeners want it that way.

More in Business

Just In