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Fed Reserve Numbers Show CU Consumer Credit Accelerated by $7.5B in June
Monday, August 10, 2015 6:35 AM

According to numbers released Friday by the Federal Reserve, consumer credit at credit unions surged by $7.5 billion in June, more than doubling the prior month’s gain of $3.4 billion. While revolving credit (tied to credit card use) took a step back during the month, the non-revolving segment that typically reflects financing of larger purchases such as education or automobiles soared by $8.4 billion.

“Rising consumer credit is indicative of a borrowing and lending dynamic in the economy that is well-functioning,” Perc Pineda, CUNA senior economist, said. Pineda also noted an encouraging set of trends that could bode well for auto lending at credit unions in the coming months.

In the jobs report released Friday, the auto industry posted one of the strongest months of payroll expansion across all industries. This means that consumer consumption on automobiles is rising toward pre-recession levels, which should only fuel the credit union movement’s already-healthy lending activity.

For all major holders, consumer credit advanced by $20.7 billion in June, a quicker pace than the $16.5 billion increase seen the prior month (Economy.com Aug. 7). Revolving credit balances for all major holders rose by $5.5 billion, while the non-revolving segment increased by $15.2 billion.

“Consumers are feeling more confident in financing big-ticket items thanks to steady gains in the job market and house prices that, although slowing, are trending in the right direction,” said Thomas McCartin, Moody’s analyst (Economy.com). “Extremely low interest rates and easier access to credit are enticing consumers to finance large purchases such as education and vehicles.”