Magazine article American Banker

Too Soon to Say Credit Is Back

Magazine article American Banker

Too Soon to Say Credit Is Back

Article excerpt

Byline: Kate Fitzgerald

Consumers' rising revolving credit may mean the pullback in consumer lending is easing, but an analyst warns against drawing too many conclusions from the recent data.

"Data from a single month does not translate to a trend, and there are several other reasons to be cautious about overinterpreting the May revolving credit data," Scott Hoyt, senior director of consumer economics for Moody's Analytics, a division of Moody's Investors Service, said in an interview.

U.S. consumer revolving credit in May saw its biggest jump in nearly three years, interrupting a steady decline in consumer credit card balances that began in mid-2008, according to Federal Reserve data released Friday.

Revolving credit, 98% of which is consumer credit cards, rose to $793.1 billion, up 0.42% or 5.1% on an annualized basis, from $789.8 billion in April, the Fed reported in its monthly G.19 report.

The surge, along with recent indications that new credit card account originations are on the rise, could mean that a sustained pullback in consumer lending is easing.

One factor that could have contributed to the May uptick in credit card borrowing was a spike in gasoline prices that occurred the same month, Hoyt said.

"Because gas is largely purchased on plastic, and particularly with credit cards, the gas price spike may have contributed to higher credit spending that may be paid off before it turns into revolving debt," he said. …

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