Credit expansion rate drops to 1.2% from 3% in September

  • U.S. consumer-credit growth slows in October
  • Consumer credit expands at 1.2% annual rate, down from 3% rate in September
  • Total consumer credit rose $5.2 billion in October, down from a $12.2 billion gain in the prior month
  • Revolving credit, like credit cards, slowed to a 2.7% rate in October after a 4.1% growth rate in the prior month
  • Nonrevolving credit, typically auto and student loans, rose at 0.7% rate after a 2.5% rate in the prior month
  • Tighter standards and higher rates are beginning to weigh on credit growth
  • Credit card debt as a share of household incomes is lower than on the eve of the pandemic
  • The clear downward trend in consumer credit is expected to continue in the coming months
  • Stocks were higher in afternoon trading while the 10-year Treasury yield rose to 4.14%

Total consumer credit in the U.S. rose by $5.2 billion in October, a significant decrease from the $12.2 billion gain in the previous month. This translates to a credit growth rate of 1.2% annually, down from 3% in September. The slowdown was primarily driven by a decrease in revolving credit, such as credit cards, which grew at a rate of 2.7% in October compared to 4.1% in the prior month. Nonrevolving credit, which includes auto and student loans, also experienced a slower growth rate of 0.7% after a 2.5% rate in the previous month. This category of credit is typically less volatile. Economists had anticipated a $9.1 billion gain in consumer credit for October. The decline in credit growth can be attributed to tighter lending standards and higher interest rates, which are making consumers less willing to take on additional debt. However, it is worth noting that credit card debt as a share of household incomes is lower than pre-pandemic levels. Analysts expect the downward trend in consumer credit to continue in the coming months as higher rates further discourage borrowing. In the market, stocks were higher in afternoon trading, while the 10-year Treasury yield rose to 4.14%.

Factuality Level: 8
Factuality Justification: The article provides factual information about the rise in consumer credit in October, including the total credit growth rate and the rates for revolving and nonrevolving credit. It also includes quotes from economists and market reactions. However, the article lacks in-depth analysis and context, and there is no mention of the source of the data or any potential biases.
Noise Level: 3
Noise Justification: The article provides a brief summary of the Federal Reserve’s report on consumer credit growth in October. It includes key data on revolving and nonrevolving credit rates. However, the article lacks in-depth analysis, evidence, and actionable insights. It also includes unrelated information about stock market reaction and the 10-year Treasury yield, which is not directly relevant to the topic.
Financial Relevance: Yes
Financial Markets Impacted: The article provides information on consumer credit growth, which can impact financial markets and companies in the lending and credit industries.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article discusses the growth rate of consumer credit, which is relevant to financial markets and companies in the lending and credit industries. However, there is no mention of an extreme event or its impact.
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Reported publicly: www.marketwatch.com