Consumer Credit Increases in September

According to the Federal Reserve, total consumer credit experienced a significant increase of $9.1 billion in September. This follows a steep drop of $15.8 billion in the previous month. The increase translates to a 2.2% annual growth rate, compared to a 3.8% decline in the prior month.

Economists had predicted a slightly larger increase of $9.5 billion, as reported by the Wall Street Journal forecast.

Key Data

Revolving credit, which includes credit cards, saw its growth rate slow down to 2.9%, following an impressive 13.7% gain in the previous month.

Nonrevolving credit, which typically includes auto and student loans, rose by 1.9% after an unexpected 9.8% decrease in the prior month. This category of credit is generally less susceptible to volatility. Economists attribute the August decline to the White House plan to forgive some student loans, which was not blocked by the Supreme Court's ruling.

It's important to note that the Fed's data does not encompass mortgage loans, which represent the largest portion of household debt.

The Bigger Picture

Economists highlight the fact that borrowing money has become more expensive due to the Federal Reserve's increase in interest rates and banks tightening their lending standards. Consequently, consumers are expected to be more hesitant when it comes to using credit cards.

A separate survey conducted by the New York Fed revealed a concerning trend of credit card delinquencies, particularly among borrowers aged 30 to 39.

Market Reaction

In late-day trading on Tuesday, stocks experienced an upturn, while the 10-year Treasury note observed a decrease of seven basis points, settling at 4.57%.