Easy Loans

The Board of Governors of the Federal Reserve announced the the Reserve Banks transferred approximately $76.9 billion of their estimated 2011 net income to the U.S. Treasury. This is slightly less than the $79.3 billion distribution to Treasury for 2010.

The Reserve Banks had an estimated unaudited net income of $78.9 billion for 2011. The Reserve Banks reported reported revenues of $83.6 billion in interest income on securities acquired through open market operations. Additional earnings were derived primarily from realized gains on the sale of U.S. Treasury securities of $2.3 billion, foreign currency gains of $152 million, and income from services of $479 million.

The Reserve Banks had interest expense of $3.8 billion on depository institutions reserve balances and term deposits.

Operating expenses of the Reserve Banks totaled $3.4 billion in 2011. In addition, the Reserve Banks were assessed $1.1 billion for the cost of new currency and Board expenditures and $282 million to fund the operations of the Bureau of Consumer Financial Protection and Office of Financial Research.

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Household net worth continued its recovery in the fourth quarter, gaining $1.17 billion. Household net worth has been revering steadily since the beginning of 2009 and is now approaching its pre-crisis peak. The fourth quarter’s household net worth is just $1.3 billion short of its 3Q 2007 peak of $64.4 billion. Household net worth rose 9% over 2012.



The improvement was driven primarily by a near $800 billion increase in the value of financial assets that occurred despite stock market declines. The Dow Jones Industrial Average fell 2.5% over the quarter. The increase in the value of financial assets shows households’ increasing willingness to invest, as household holdings of equities surged. The Dow has now surged 9.1% so far in 2013, indicating that improvement in household net worth will likely improve.

Home equity also improved as the housing recovery continued, with net worth receiving a $500 billion increase due to real estate wealth. Home equity as a percentage of household real estate rose to 46.6%, its highest level since the first quarter of 2008.

Liabilities also rose for the household sector as families become willing to take on more debt. Total liabilities rose by about $133 billion, as household debt grew at an annual rate of 2.4% in the fourth quarter.

Read the Federal Reserves Z.1 release.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced that the Trade Deficit fell in May to $48.7 billion, down from $50.6 billion in April.



Total May exports were $183.1 billion and imports were $231.8 billion. May exports were $0.4 billion more than April exports of $182.7 billion. May imports were $1.6 billion less than April imports of $233.3 billion. Cheaper oil from abroad helped to narrow the trade deficit.

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Consumer credit rose by $14.6 billion in the final month of 2012, driven entirely by gains in non-revolving credit. Consumer credit has now grown for five consecutive months, gaining over 10 billion each month. Gains in recent months have been driven almost entirely by the non-revolving segment. Growth from a year ago slipped slightly, falling to 5.7% in December from 5.8% the previous month.



Nonrevolving balances accounted for the entirety of December’s gain, more than offsetting a decline in revolving balances. Revolving credit fell by $3.6 billion in December, negating most of the gains seen in the previous two months. Revolving balances have been volatile in 2012, rising in just half of the months.



Nonrevolving credit grew by $18.2 billion in December, its fifth consecutive gain and the largest gain of the five. Nonrevolving credit has now grown 8.8% in the past year. On a non-seasonally adjusted basis, nonrevolving credit saw much smaller gains. Student loans continue to make heavy contributions to credit growth, accounting for about half of the non-seasonally adjusted balance.



Read the Federal Reserve release.

Consumer credit continued to grow at a rapid pace in January, rising by $17.7 billion. Consumer credit has now grown by $54 billion in the past three months, the fastest pace since October 2000. Consumer credit has expanded for five consecutive months, and for 15 out of the past 16 months.


Non-revolving credit continues to drive the growth, expanding by $20.7 billion, the fastest pace since November of 2001. The surge in non-revolving credit was driven largely by federal government balances, which include student loans. This accounted for 85% of the monthly change in non-revolving credit. Strengthening auto sales also helped grow consumer credit.

ABA Chief Economist James Chessen said, “Student loan growth continues to dominate the increase in consumer credit, and is having a major impact on overall non-mortgage consumer debt.”


Revolving credit fell by $2.9 billion in January, the first contraction in five months. Despite the fall, revolving credit has growth by $6.2 billion in the past year.

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Consumer credit rose $17.1 billion in May. This ninth consecutive month of growth was fueled by the largest one-month gain in revolving credit since 2007. Consumer credit grew at an annualized rate of 8% and is close to prerecession levels. On the other hand, revolving credit remains below prerecession levels despite the large gain in May.



The demand for auto loans, student loans, and other types of nonrevolving credit increased at a 6.5% annual rate, or $9.1 billion. Revolving credit, the borrowing category including credit cards, rose at an 11.2% annual rate, or $8 billion.



Read the report.