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Consumer Credit Contracts For 9th Straight Month, Non-Revolving Credit Increases
The latest Federal Consumer Credit update was just released.
Consumer credit decreased at an annual rate of 3-1/4 percent in the third quarter of 2009. Revolving credit decreased at an annual rate
of 7-1/4 percent, and nonrevolving credit decreased at an annual rate of 1 percent. In October, consumer credit decreased at an annual
rate of 1-3/4 percent.
Total borrowings declined by 3.5 billion to a total of $2,482.9 billion, with revolving credit declining by $6.9 billion while non-revolving increased by $3.5 billion. As non-revolving credit is directly linked to auto purchases, the seasonal spike in this segment is not surprising as consumers rushed to get financing for all those CfC subsidized Toyotas (and to a lesser extent, domestic cars). Notable is that the LTV increased to a skyhigh 93%, while the average amount financed has hit a record of $32.3k, a jump of over 6% MoM. The expected total decline was $9.4 billion, with economists likely ignoring the consumer need to finance even much cheaper auto purchases.
Another perspective on the seasonality of consumer credit MoM changes since 1943 courtesy of CreditTrader, implying that there is a natural tendency for consumers to lever up into the holiday season.
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It all doesn't matter as long as the Fed has the fire hose wide open. Since there is no "supply" problem, the only real problem is credibility. As long as chump # 1 thinks he can game the system and get out before he/she is hurt, chumps # 2 and 3 have to play or go home. No self respecting gamer stops playing until the screen says "Game over."
The newest version of dancing until the music stops.
Sorry, but you're wrong. There's A LOT more credit out there than the consumer loans. You're forgetting the derivatives tied to these.
A total of $610 Trillion world wide, according to the most recent BIS report.
While the Fed could give everyone $100 Million in their Bank account, foreigners would be most unhappy. Especially the one's with the oil.
Think $1 Million for a gallon of gas. Only you don't have a job anymore.
You're forgetting that the Markets always have, and always will, eat Central Banks for lunch.
A report from the Fed that is better than expected and includes HUGE revisions?
I like it. I feel good. I'm going shopping.
Have a holly, jolly Christmas. It's the best time of the year!
(It was Friday afternoon and was making my way through Times Square. Had not been on the island since they turned Broadway into a pedestrian mall. Sauntering around the tourists in chairs I spied a crawl : ABC News -America back to work, unemployment rate unexpectedly drops to 10%. The thought froze me as the panorama of human pinballs receded ... its' like the Matrix.
The Great Depression?
No, the Great Deception.
Thank god for my red pills ...
Mr. King? -AM)
Monday December 7, 2009 – Issue 3650
'Independent View of the News'
The King Report
The ridiculously good November NFP is beyond comprehension. It is not supported by ADP data, other private data, ISM data, tax receipts, which still show large declines, retail sales or consumer confidence.
Plus the BLS revised September and October NFP 159k higher!!! Thank you, Ministry of Truth!
Until they become conscious they will never rebel, and until after they have rebelled they cannot become conscious. -George Orwell
Despite tax data that shows hefty declines, the past three months have shown enormous jobs gains NSA versus 2008. According to the BLS, 1.177 million jobs NSA were created over the past three months versus a loss of 120,000 jobs for the same period in 2008, a job gain of ~1.3 million jobs y/y!?!?!
ADP, which actually counts jobs, shows a loss of 169k for November. There is now about a 4.6m job discrepancy since January 2008 between ADP’s job count, which shows ~2.8m losses and the BLS, which shows about 1.8 million jobs created…PS - NSA jobs are supposed to pay real taxes; SA jobs do not.
(Mr. King is not including the ~1m announced benchmark revision. -AM)
While the NFP is absurd, what is even more troubling is the number of Street pundits and gurus that proclaim it as ‘real’ or a sign of recovery…
Sanity is not statistical. -George Orwell
The U6 fell to 17.2 from 17.5. Few analysts noted or commented on these factoids from BLS: The number of long-term unemployed (those jobless for 27 weeks and over) rose by 293,000 to 5.9 million. The percentage of unemployed persons jobless for 27 weeks or more increased by 2.7 percentage points to 38.3 percent. Among the marginally attached, there were 861,000 discouraged workers in November, up from 608,000 a year earlier.
So 253,000 workers dropped out of the work force in November.
(Where did you go Joe? A nation bids its unemployed adieu. -AM)
Job losses in the construction, manufacturing, and information industries were offset by job gains in temporary help services and health care. Since the recession began, payroll employment has decreased by 7.2 million…Temporary help services accounted for the majority of the increase, adding 52,000 jobs.
Follow the money. -Deep Throat/Mark Felt
November 2009 (FY 2010) withheld income & employment taxes are: $271,591 million (FY to date)minus $19,186 (Dec.) minus $135, 328 (Oct) or $117,077 million.
November 2008 (FY 2009) withheld income & employment taxes are $144,782 (million); November 2009 (FY 2010) taxes are down 19.14% or $27.7B!!! Do you still believe the NFP number?
When you have eliminated the impossible, whatever remains, however improbable, must be the truth. -Arthur Conan Doyle
For the past three months, which BLS has job growth of 1.177m, withheld income & employment taxes are $471,307. For the same period last year, with job losses of 120k, taxes are $581,857. How can the past three months show job growth of about 1.3 million y/y when withheld income & employment taxes declined from $581,857 to $471,307 ($101.5B), for a decline of 19% y/y!!! September 2008 withheld & income taxes: $272,228 (Sept 2009 is $218,902)
Figures don't lie, but liars figure. - Mark Twain
Let’s look at the dilemma of sharply lower income taxes and higher jobs data another way. If the average income in the US is $50k, and the tax rate is 17.38%, each new job should create $8690 of income taxes. If the BLS is correct and 1.17 million more jobs were created the past three months (versus than the same period of 2008), income taxes should be up over $101.6B; but taxes are DOWN $101.5B!!!
The Lord gave, and the Lord hath taken away; blessed be the name of the Lord. -The Book of Job
Trim Tabs: TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy shed 255,000 jobs in November. This past month’s results were an improvement of only 10.2% from the 284,000 jobs lost in October…In November, the BLS revised their September and October job losses down a surprising 44.5%, or 203,000 job…
Discover Card: Economic Confidence Plunges; Low Expectations for the Holidays Economic confidence among America's small business owners plummeted in November, as more owners cited serious concerns about cash flow and saw economic conditions for their own businesses getting worse. The Discover Small Business Watch index fell 12 points in November to 76.5 from 88.5 in October.
62 percent of small business owners rate the economy as poor, an increase from 55 percent in October; 30 percent rate it as fair, and 8 percent say it is good or excellent.
Small business generates an estimated 70% of job growth. With small biz owners overwhelmingly gloomy, there won’t be much job growth from them. That is why the IRS data is so gloomy.
In a speech on Friday, Obama called the jobs reports a ‘hopeful sign. We call it ‘fraud’.
Is the unfathomably good NFP report and Obama’s job summit with all the hoopla and hype just a coincidence?
Once is happenstance, twice is coincidence, three times is enemy action. -Ian Fleming
The late Al Sindlinger used to warn that GDP, jobs reports and other economic indicators are manipulated and the best indicator of economic health is consumer income and ‘household liquidity’. And Al asserted that taxes are the best indicator of income, which also correlates tightly to consumer sentiment – on both the economy and politicians.
(Pay the man Shirley. -AM)
r u a bot?
100% human.
Follow the white rabbit.
Excellent excerpt, I highly enjoyed the truthiness.
Hopefully this just ends in tears and not fireworks.
Wow! You pack quite a punch. Thanks bro - good work.
There is no doubt in my mind that things are getting worse not better. My company "today" announced 500 layoffs of "customer service reps" and a restructuring of branches. You don't do that if the economy is improving. You do that to batten down the hatches and prepare for rough weather.
Just a few minutes ago I rode down several streets in "upscale neighborhoods" to count the number of homes For Sale. The number is signficantly higher in this upper middle class neighborhood than it was 3 months ago. (The last time I drove through this neighborhood.)
I am hearing this from other people "anecdotally." (Other neighborhoods where the number of homes for sale has increased and companies beginning new rounds of layoffs.)
Part of this is greed because companies have discovered that they can intimidate current employees (fear of being fired) into working harder. Now they can cut costs and freeze hiring to get even more productivity. I blame corporate greed for that. I also blame so-called "healthcare reform" because companies don't want to commit to hire more employees if they do not know the cost.
My guess is U3 will be around 10.5-11% by August 2010 and U6 may be north of 20%. But the sunshine pumpers on CNBC will still be talking "green shoots." (Just to keep the masses in line so to speak. Don't want any riots on TV ya know.
Speaking of the Orwellian totalitarian state, this quote was posted Friday by Anonymous #153530. At the time he was reading Orwell's Animal Farm to his seven year old son, who was struck by the parallels to today's Bureau of Labor Statistics and its “dissemination of misinformation”:
"Throughout the year the animals worked even harder than they had worked in the previous year. To rebuild the windmill, with walls twice as thick as before, and to finish it by the appointed date, together with the regular work of the farm, was a tremendous labour. There were times when it seemed to the animals that they worked longer hours and fed no better than they had done in Jones’s day. On Sunday mornings Squealer, holding down a long strip of paper with his trotter, would read out to them lists of figures proving that the production of every class of foodstuff had increased by two hundred per cent, three hundred per cent, or five hundred per cent, as the case might be. The animals saw no reason to disbelieve him, especially as they could no longer remember very clearly what conditions had been like before the Rebellion. All the same, there were days when they felt that they would sooner have had less figures and more food." - Animal Farm, Chapter 8, Paragraph 2
http://anonymousmonetarist.blogspot.com/2009/12/groundhog-day-slaughterhouse-fine.html
'If you didn't care what happened to me,
And I didn't care for you
We would zig zag our way through the boredom and pain
Occasionally glancing up through the rain
Wondering which of the buggers to blame
And watching for pigs on the wing.'
-Pink Floyd
'When brokers get on a plane it proves that pigs can fly.'
-Anonymous Monetarist
-AM
Flash: .... Comments in the form of a hard hitting news report. .......
Get it first, get it right, on Zero Hedge -----> Are you Hedged?
and now a word from our sponsor....
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Yes, Net tax revenues do not lie. It is the great equalizer in any round table economic discussion. You cannot have real job growth without an increase in Net tax revenues. Now it may take a month or so for a new stimulus program to filter through, but if it increases payrolls, it will be reflected.
Mark Beck
Team.
It looks like you need some assistance in growing interest in these credit related stories.
We need to put certain symbolic words in the title of any credit related story. Chose one from the list below and insert it into the story title. It's not important if the chosen word does not make sense in it's position.
Mezuzah
Tzitzit
Tallit
Tefillin
Menorah
Yarmulke
Matzoball
Magein David
Chai
Hamesh Hand
Donning
Tallit
Tefillin
Shalom
Following this golden rule and your credit related stories will be the most popular stories on the site.
The non-revolving credit is odd, while consumers cut their revolving credit quite nicely (with respect to 2008 and even 2007) they increased non-revolving, and given that much less vehicles were sold in 2009 relative to 2008 and 2007, something else is at play here (see the totals).
A 32223$ would imply everybody is going for luxury cars which is also not likely.
Anybody has more info on the non-revolving part?
depending on your perspective the revolving side is either good as credit isn't being "cut" as the drawdown is pools rolling off or it is bearish in that the contraction is just being Q'ed up for the coming year. Either way fail.
The nonrevolving side has no further deislcoure other than the footnote on the student loans being included. Otherwise just assume GMAC for the aztec
Pimco makes its biggest push into actively managed equities by hiring Franklin Resources' Anne Gudefin and Charles Lahr, the co-managers of Franklin's Global Discovery Fund, which has beaten 99% of similar funds in the past five years. And the firm hires former bailout chief (and Sunday profile subject) Neel Kashkari.
Zero rates = Zero demand. The Fed has shot itself in its own foot.
Borrow at 29% while earning 1%... I believe i'll pass on that one. CC's
Borrow at 5% for a House that declines 12% a year, real cost 17% ... Pass also.
Borrow for a new car 20 k that will be worth 10k in 2 years.. 50% depreciation... Pass...
Only thing folks really want to buy is time......hoping the Grim Reaper of Joblessness passes their door.
Folks - you should read this excellent article by Nate:
http://economicedge.blogspot.com/2009/12/state-of-union-in-charts.html
It shows credit as well as the rest of the "State of the Union" in charts.
The bottom line is that when credit continues to contract like it is, deflation is gaining strength.