The key message
Quarterly US consumer credit flows (Source: FRED; CMMP)
The key message
Have US consumers finally read the recession script?
Quarterly US consumer credit flows slowed to only $4bn in 3Q23, down from $26bn in 2Q23 and $52bn in 1Q23 (see key chart above). These latest quarterly flows are the weakest since 2Q20, and represent only a very small fraction of the pre-pandemic average quarterly flow of $45bn.
Monthly US consumer credit flows (Source: FRED; CMMP)
Monthly flows were volatile during the 3Q23 (see chart above). The flow of consumer credit recovered in September to £9bn after repayment of $16bn in August, but remained below July’s flow of $11bn. Three-month moving average flows fell steadily, however, from $7.8bn in July to $2.8bn in August and $1.8bn in September. These smoothed flows compare with the pre-pandemic average of $14.8bn.
So what?
In recent quarters, we noted the sharp moderation in US consumer credit demand. Weakness in the 3Q23 and revised figures for 2Q23 (revised lower) indicate much weaker dynamics and elevated risks to US consumption and the growth outlook.
Please note that the summary comments and charts above are abstracts from more detailed analysis that is available separately.