Consumer Credit Expands During All of 2021

On Monday (2-7-22), the Federal Reserve released their G.19 report for 2021. According to the report, with further analysis provided by the National Association of Home Builders, in 2021, consumer credit increased 5.9%, with revolving and nonrevolving credit increasing 6.6% and 5.7%, respectively. During Q4, consumer credit increased at a seasonally adjusted annual rate of 6.6%, while in December it increased at a seasonally adjusted annual rate of 5.1%.

November saw revolving credit jump at a record annualized rate of 23.4%—the largest in its category in two decades. The gain in October was 7.8%. A slightly lesser surge occurred in June at 21.2%.

The NAHB suggests that the November jump may have reflected households using credit more freely due to improved confidence, compared to the months before when they paid down the debt due to economic uncertainty at that time. With the Federal Reserve’s commitment to hike rates in 2022, credit cards’ prime rates are expected to increase and, in turn, increase the amount of interest owed on revolving credit balances.