Consumers Hesitate to Take On Credit

Overall numbers are up, but deeper signs point to potential pullbacks.

Mar 8, 2014 at 3:30PM

Total consumer credit expanded at an annual rate of 5.3% for January to hit $3.11 trillion, according to a Federal Reserve Consumer Credit report (link opens a PDF) released Friday. 

After expanding at a seasonally adjusted annual rate of 6.2% for December, this month's increase was due exclusively to a 7.5% jump in nonrevolving credit, which includes fixed-payment loans such as car loans, school loans, and any other non-recurring credit.

But January's jump came mostly from government purchases of student loans, according to The Wall Street Journal, hiding an otherwise meaningful dip in revolving credit outstanding.

Revolving credit (no fixed number of payments, e.g., credit cards) fell 0.3% for January. While December's solid 4.3% expansion pointed to increased consumer confidence, this latest number alludes to increasingly careful consumption. 

In absolute terms, analysts had expected a $14 billion increase in overall credit outstanding, while actual numbers came in at $13.7 billion. 

US Total Consumer Credit Outstanding Chart

US Total Consumer Credit Outstanding data by YCharts


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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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