The Federal Reserve reported that consumer credit fell by 5.6% in February. That erased all of January's 5.2% gain. In the first month of the year, total credit had expanded for the first time since January 2009. Now, that looks like just a blip. March could see higher levels of credit, however.

Breaking down the credit into its components also reveals that credit shrunk almost across-the-board in February. Revolving credit declined by 13.1% and non-revolving credit fell by 1.6%. The federal government was the only major holder of credit that saw its balance rise, by around 2%.

This chart below shows how revolving and non-revolving have changed since the start of 2007.

c credit 2010-02 cht1 v2.PNG

As you can see, most of total credit's decline has been due to revolving credit. Non-revolving credit has declined only 1% over that time, while revolving is down 10%.

Here's another chart showing the month-over-month change in credit since the start of 2009:

c credit 2010-02 cht2.PNG

This demonstrates just how rarely credit has grown during over this period. A smoothed version of that chart, utilizing a 3-month average, tells a similar story:

c credit 2010-02 cht3.PNG

March, however, could be different. Retailers are indicating that spending was up last month. Considering hourly earnings actually declined by 0.1% in March, consumers are likely relying more on credit in order to make those purchases. Pending home sales were also up in February, which should raise non-revolving credit. These indicators suggest March has a shot at seeing some credit growth.

Note 2: This post has been corrected through a strike-through as I learned after-the-fact that real estate debt is not included in this statistic.

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