The October credit card surprise wherein Americans tacked on $8 billion in revolving credit petered-out in November, dropping more than $2 billion, ostensibly due to the very late Thanksgiving Day holiday break. As a result, the year-over-year expansion in credit card debt declined in November by nearly 3%, compared to a near 9% increase in October.
The October surprise is consistent with the erratic pattern of consumer spending and borrowing in 2019. Over the past 11 months the monthly YOY (year-on-year) change has range from a revised minus 2.3% (March) to a revised positive 10.2% (July).
So far in 2019, the data show American have added $33 billion in revolving consumer credit, on par with the $30 billion annual gains in the past three years, but well below the $100+ billion party in 2016.
U.S. revolving credit, (97% credit card debt), increased in November at an annual rate of -2.7%, compared to one-year ago, and follows a revised +8.8% YOY (year-on-year) gain in October, according to CardData.
U.S. revolving consumer credit stood at $1086.3 billion at the end of November, compared to a revised $1088.7 billion for October, and a revised $1080.8 billion for September. At the end of 2018, Americans owed a revised $1053.5 billion in revolving credit, according to the latest figures released by the Federal Reserve.
Senior Analyst Robert McKinley says the erratic nature of the U.S. credit behavior is reflective of the uncertainty plaguing the overall economy throughout 2019. Americans made out-of-pattern purchases to avoid trade tariff pricing such a pre-buying and hoarding.
McKinley notes the picture will come in focus next week as the top credit card issuers and payment networks release their fourth-quarter performance reports.
Quarterly Credit Debt Analysis
On a quarterly basis, U. S. consumer revolving credit increased a revised 3.6% YOY in the third-quarter, compared to a revised 5.2% YOY in the second-quarter, and a revised 3.4% in the third-quarter of last year. U.S. revolving consumer credit is now growing at a revised 4.11% CAGR (compound annual growth rate) since the third-quarter of 2015, based in analysis by RAM Research and PYRPTS.
Non-revolving credit increased at an annual rate of 5.8% in November and a revised 5.3% for the third-quarter, according to the Federal Reserve.
Total consumer credit, at the end of November stood at $4176.0 billion, after crossing the $4 trillion milestone in November 2018.
CardTrak, CardData and CardFlash previously noted the spring credit bubble was largely attributed to pent-up consumer demand in the government shutdown and bad weather in the first-quarter. However, the brief July surge was likely driven by upcoming trade taxes and a pick up in general consumer confidence. But, it quickly disappeared in August and September with trade war uncertainty and eroding consumer confidence.
Holiday Spending Results
According to the Mastercard SpendingPulse, holiday retail sales increased 3.4% (excluding auto sales) with online sales growing 18.8% compared to one-year ago. The SpendingPulse report details holiday shopping from November 1 through December 24. Key findings of the report indicate e-commerce apparel was up 17% and online retail jewelry sales were up 8.8%. However, department stores saw overall sales decline 1.8% and online sales growth of 6.9%, electronics and appliances were up 4.6%, while the home furniture and furnishings category grew 1.3%.
Mastercard also found holiday e-commerce sales made up 14.6% of total retail and the e-commerce share of overall retail spend for Black Friday was 15.4%, and for Cyber Monday: 24.5%, in-line with data collected by Ruebud Media and Red3 Media.
Top 4 U.S. Credit Card Issuers
Third-quarter card loan growth, among the Top 4 U.S. issuers, grew a solid 4.3% year-on-year (YOY), compared to 2.6% YOY in the prior quarter, and compared to 2.8% YOY one-year ago. Among the nation’s Top 4 credit card issuers (Chase [JPM], Capital One [COF], Bank of America [BAC], and Citibank [C]), the annual growth rate for U.S. end-of-period (EOP) credit card outstandings in the third-quarter (3Q/19) is the second lowest in the past five years.
For the third-quarter U.S. credit card EOP outstandings, among the Top 4 posted at $450.8 billion, compared to $440.2 billion for 2Q/19, and $432.1 billion for 3Q/18. For the third-quarter of 2015, the Top 4 reported $362.4 billion in U.S. EOP credit card outstandings, according to figures collected by CardData and PYRPTS.
The YOY gain in U.S. EOP outstandings for the third-quarter of 4.3%, compares to a YOY increase of 2.8% in 3Q/18, 6.5% in 3Q/17, and 8.9% in 3Q/16. U.S. EOP outstandings for the Top 4 U.S. issuers is now growing at a 5.61% compound annual growth rate (CAGR), compared to 5.31% in the prior quarter, according to RAM Research.
National Consumer Confidence
The Conference Board Consumer Confidence Index decreased marginally in December in what would have been five consecutive months of decline. However, there was a slight upward revision for November. The Index now stands at 126.5, down from a revised 126.8 in the prior month. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – decreased from 100.3 last month to 97.4 this month. Consumers’ assessment of the job market was mixed. Those saying jobs are “plentiful” increased from 44.0% to 47.0%, however, those claiming jobs are “hard to get” also increased, from 12.4% to 13.1%.
Source: Federal Reserve; Mastercard; RAM Research; CardFlash; CardData; CardTrak; Conference Board; Chase; Citibank; Bank of America; Capital One; Bankcenter; CardBuzz; PYRPTS; PYVNTS; Ruebud Media; Red3 Media