USA consumer credit use moved up 6.6% year-over-year in September.  Non-revolving credit was up 6.3% and was growing at an annualized rate of 5.6%. Revolving credit rose by a healthy 7.7% year-over-year and was up at a 5.5% annualized pace.

There’s a lot of speculation about what to make of this – and you’ll hear 5 different viewpoints if you talk to 5 different people.  Some believe that this is simply a sign that consumers are feeling good about themselves and are willing to take on various types of debt to buy products and services.  It’s a form of consumerism and spending that makes economic growth accelerate.  

Contrarians will worry that this is a sign that the consumer is not as healthy as one might expect. They will point to data such as mortgages accounting for 4.4% of disposable personal income and consumer debt (of other types) taking up was much as 5.5%.  That’s a problem, because they believe that one creates household wealth while the other eats it. Total consumer debt as a percentage of disposable personal income is now about 26.2%, up just slightly over the past several months. We’ll let you determine whether this is a good thing or not. Right now, since hiring is steady, job openings are high, and disposable personal income seems to be improving, we wouldn’t send up warning flares on this report alone.

Courtesy of Armada Corporate Intelligence