Two consecutive months, opposite directions. In April, total US consumer credit rose by $20.82 billion on an upward revision. In May it fell by $0.18 billion. Economists had expected an increase of $17.1 billion [1].
The swing between those months is roughly $21 billion, and the miss against expectations is about $17 billion on its own.
Within the total, the more revealing line is revolving credit - overwhelmingly credit-card debt. It fell from $1.35 trillion to $1.34 trillion [1]. Non-revolving credit, mostly auto and student loans that people cannot easily stop paying or start adding to, rose modestly to $3.81 trillion [1].
There are two readings of a month like that, and they are not equally comfortable. One is discipline: households choosing to deleverage. The other is capacity: households having reached the limit of what they can add. The composition points at the second, because the category that fell is the one people reach for when they are short.
The timing is what will matter on Wednesday. May is the month fuel costs began climbing, and the national average for gasoline now stands at $4.110 a gallon against $3.151 a year ago [3].
The Federal Open Market Committee meets on July 29 with markets pricing a 34.2 percent chance of a quarter-point increase, up from 12.8 percent a week earlier [2]. A rate rise reaches households through exactly the balances that just stopped growing.
