Consumer Credit Plunges In May, April Revised Much Lower, As Government Only Marginal Lender For Two Months In A Row

Tyler Durden's picture

The latest consumer credit number continues the decline we have seen in recent months, plunging from $2424.4 billion in April to $2415.3 billion in May, a $9.1 billion decline, or 4.5% annualized, on consensus of $2.3 billion. Yet the biggest stunner was the April revision which was whacked from +$1 billion to a revised -$14.9 billion! In other words, there has been a $24 billion decline in consumer credit in the past two months. The biggest hit was, as usual, experienced by revolving credit accounts, which fell by a 10.5 annualized rate to $830.8 billion, from $838.2 billion in April, and just north of $910 billion a year earlier. The bottom line is that consumers continue to retrench as the deflationary wave gets ever bigger. And the only lender, for the second month, running, is guess who... Yet stocks, which confirm again they are now completely decoupled from facts, statistics, or reality in general, jump on this very negative development.

And guess where the only increase in May lending came from... You get one guess.

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NOTW777's picture

no surprise here.  most companies charging rates north of 15% on the free ben money.  pay it down and dont come back

molecool's picture

Never went there in the first place - they can all wither and die for all I care. Zero debt and all cash (plus a few long term puts). See you at the bottom.

Whizbang's picture

A smart man. I am in a situation that is very similar to yours.

Nolsgrad's picture

try more like 20% percent.

Cognitive Dissonance's picture

Uncle pick pocket to the rescue.

Epic Fail!

BTW here comes the end of day pump courtesy of Uncle pick pocket's endless salad bar of printed money.

Oso's picture

no one seems to have an explanation for this.  so, of course that means PPT etc.  must mean QE 2.0 is around the corner, but i dont really get how QE will bring rates lower to help idio -- i mean -- americans borrow more??

Whizbang's picture

Simple explanation, the banks don't have to lend money to people because they are able to rate arb the discount window and the ten year t-bill. So credit contracts. If it continues, things are going to get pretty interesting around here because credit contractions are very scary.

Assetman's picture

Oh, I'm sure they WANT you to believe that QE 2.0 is just around the corner.  One nice fat significant short squeeze in the face of falling economic numbers is probably the only firepower the PPT will use (with the help of INTC earnings) before they allow the next leg down.

The next leg down will entail 10-year Treasury yields with a 1-handle, so Turbo Timmy can back up the truck and extend roll duration. 

We will get to QE 2.0... when the huddled masses are pleading for it.

cougar_w's picture

when the huddled masses are pleading for it.

November. And as a populist prop.

I'm thinking literal money thrown out of literal helicopters, just in time for xmas.


Noah Vail's picture

Take a look at the Dow chart 1930 - 36 and you'll see the same kind of crazy melt-ups. Was there a PPT back then? Was the Fed intervening. Face it folks, there are one hell of a lot of people out there who believe Fed is God and that it can save them from anything. Especially the squids, and why shouldn't they since it always has.

Hondo's picture

Take out the student loans and the declines have been much greater......

Shameful's picture

Look for funny out of that market too.  When you have hoards of students pile out of school with huge debt and no jobs they are not going to be able to pay back those gov backed loans.

DosZap's picture


Zactly,WHY do you think this is so?.

Simple, the Regime needs bodies, for the NEW brown, er' Public Sevice',Corp.

Same reason he has told Grads, and soon to be grads, to NOT go to work in the Fin/business sectors, but the Health Care Sectors........

Why?..because the Fin/Bus sectors once money making sectors, are soon going AWAY.............

Shameful's picture

Oh I have no doubt that in a not to distant future there will be a system to "volunteer" for some kind of long term to keep the loan hounds off.  It keeps the academics and college industry happy and a crop of young debt slaves with no options.  And the debts are EPIC, I personally know several people who are more then 6 figures in, and slim job hopes.  So it wouldn't surprise me that some may the option of going to "serve" in some occupation force rather then suffer under an eternal and unpayable debt.

Mikebrah's picture

That sounds a lot like the recruitment strategy for the army.  Find rednecks with no prospects, give them a gun, tell them to kill some Arabs and keep America safe, and then you get some money for school.

SteveNYC's picture

Obummer will loan them the money, government backed, to pay back their government backed education loans.....this makes sense, right?

faustian bargain's picture

Just today I heard a radio ad for National Guard recruitment, saying they would pay off up to $50k of student loans.

Gosh I wonder where that money is coming from.

zhandax's picture

Gee, and the government accounts for that how?  Sweep it under the rug?

molecool's picture

The second you posted this ES futures ramped and pushed above VWAP - LOL :-))

jkruffin's picture

The markets are doing nothing more than gambling on QE 2.0 being announced, to keep their fantasy bear market rally intact.  Nothing more, nothing less.

molecool's picture

Yupp... that'll go down really well in November.

Whizbang's picture

According to some friends of mine, there will be no QE2. There's no need for it. Treasuries are selling like hotcakes.

Bonesetter Brown's picture

QE2 will not be focused on Treasuries.  Just like QE1 was focused on MBS, not Treasuries.  Too early to tell what QE2 will target.

cougar_w's picture

I don't see how they can afford another QE-to-the-bankers. That does not save the economy in the way they need it to. QE2 will have to be cash to people on the street in the form of massive joblessness benefits, make-work, subsidies of every kind from autos to underwear, aid to small business and just maybe cash gifts in tax refunds and vouchers.

It is going to be hella populist and extremely well received by people on the ground.

It will not change our fate one iota; runway runs out in the middle of '11, and we end up in the Hudson River.

billwilson's picture

Markets see news, plunge for 5 minutes, then roar higher. Who needs credit? Buy Buy Buy ... but with what?

Takingbets's picture

With the last unemployment you receive before falling off the dole.

wiskeyrunner's picture

The federal reserve provides free money to the big dealers to prop up stocks in order to turn sentiment around.

It won't work because retail has left the market in droves. Insiders are not buying so the fed must provide the crooks with your tax money.

There game is to push up the market to lure in some greedy folks so the dealers can unload without causing a down draft.

That is why you always here the talking head so giddy as the market rises, they are in on the scam, there job is to plant thoughts in your head.




walküre's picture


That's how it's done. \It used to work when the funds cooperated. The funds are looking at other areas to invest now. I know a few fund managers that don't even want to discuss stock investments.

Raising capital for IPOs is getting tougher and tougher. There's a drought and it will lead to a liquidity problem again. Factor in the credit contraction and you get the full picture.

QE 2.0 or whatever cannot promise the fix either. It would take months before any stimulus or other liquidty would show up in the economy.

Inventories are full. Chinese are stalling. Outlook is negative. LEI are downward.

Thanks for playing. There is no safety net this time.

SteveNYC's picture

There is absolutely no doubt in my mind that this is how it is working, and has worked, for some time. Government has no doubt been complicit for a while now too (at LEAST since 9/11/01)

I don't think the talking heads are in on it though, definitely not smart enough.

sheeple's picture

Perhaps LBJ could generate a consumer-credit dead-cat-bounce with his new chinese-made Miami-Tarballs jersey

Bam_Man's picture

People squatting in pre-foreclosed homes are having their unsecured credit lines cut/eliminated.

That is the story here and it is not surprising.

Ragnarok's picture

They can still strip the copper wire out for scap to buy iPhone apps.

wiskeyrunner's picture

Todays volume even lighter than yesterday. I have been watch a price ladder of the index futures. Fake bids and offers. I have seen prices slice thru 5 layers of offers with nothing being excuted.


The are stacks of false bids and offers. This is called show only. You want to sell zero lots but can show 40 lots. There is no liquidity in this market. Thats how we go up 270 dow points on below average volume.

jkruffin's picture

Absolutely!! +1000

No one is even buying stocks anymore, everything is being done thru ETF's, as well. That is why the moves each way are so drastic.

Until they ban ETFs, HFTs, and other index funds,  expect more of the same, you don't know what you are getting into or out of at any given moment.  Let the casino operation continue as they say.

NumberNone's picture

What does reality matter when you are an HFT and your timeframe is seconds not months or years?  A global economic crash next month or next week is irrelevant. 

With HFT's the market can walk the razors edge for years since long term positions don't matter...only the money to be seized right now is all that matters.  With 70% of volume being HFT's floating to where the action is...this is a bit like a boat on the water that can be pushed in any direction with a small push.  I'm sure the PPT understands this and knows the appropriate areas of leverage to guide the boat where they want with minimal cash infusion.  In fact they may have the instruction manual on the HFT triggers courtesy of GS. 

Pladizow's picture

Reality is perception.

DavidC's picture

Yup, so an 80 point rally in the Dow following the figures...


unionbroker's picture

 wait i can pay higher i don't care if it was trading fifty cents cheaper 10 second ago i want to pay more

bugs_'s picture

Way to go consumers!  Death to Pharaoh

Wyndtunnel's picture

Watching the charts over the past few months reminds me of an overly inflated party balloon that escapes the cltuches of an eager child's mouth who can no longer muster the force to inflate it any larger...the balloon shoots into the air then erratically bounces around the room, up, down, sideways, in no particular order until it ends up flaccid on the floor covered in spit for all to step on!

John McCloy's picture

These guys are hysterical. Keep piling on the desperation banks. The Dow, S&P & the markets are all yours. In case you have not noticed it is only you and the Fed left with all the stock. All you need to know is that the Euro will without doubt fall to parity the dollar will continue upward and onward since it is a dying currency. Tick Tock banks. The economy is not only not recovering but dying.

We are watching the death of what was formerly known as Wall Street. Once again serving no utility. Inflation is occuring but in Manhattan only.The only protection in the depression...for know.

Kali's picture

Agreed, serving no utility.  There is no reason for them to exist anymore.  I think more and more people are realizing that.  The revision for the credit contraction was stunning!  I think, not only are the banksters cutting credit, but anyone with any money is paying down debt and getting rid of credit-for good.  It's all good, IMO, the sooner everyone pulls out ALL their money from the banks, Wall Street, 401ks, the better.  They need us, we don't need them.

John McCloy's picture

   Righto..Since they need us that is why we have laws and regulation passed to prevent us from choosing to not participate. 

For example..Social Security should be voluntary.

Kali's picture

Agreed, but how do wage slaves save themselves?  As a biz owner, I can choose not to pay taxes, SS/MC and risk the wrath of gov.  I can choose not to put my money in banks or Wall Street.  It's the wage slaves who need to figure out how to do that because no matter what I, and others like me do, it is negligible as we are a minority.  When are wage slaves gonna stick up for themselves?  As long as their pay is being robbed before they even get it, this scam can go on forever.  What will be the catalyst?

jkruffin's picture

Personally experienced this first hand.  Paid off 3 CC's in March, and by June all three accounts were closed by the banks Citi, BofA, Chase.  Three of the big bailout candidates.  My intention were to pay off the accounts to reduce debt, but have the credit lines available for emergency use if needed.  They closed the accounts without even telling me.  Had to get embarrassed at the store to find out.  No skin off my back though, I told them they can take their credit and shove it and don't send me anymore of their spam mail.  But, there are people out there who count on these credit lines, and are getting foooked over like this, mulitplying their problems.


I wish I could pull my money out of my 401k, because I sure would.  Can't get it unless I quit work.  Which is tempting. lol

HungrySeagull's picture

We are in a position to pay off a CC soon and retire a student load as well. We would then be out of bondgage and answer only to the Annual tax and utitlies each month as well as our daily bread.

My wife's work has been declining and she has established herself quietly part time in another part of the field she likes to work in and is almost in a postion to quit job number one, collect the 401 and move on. Just getting the health insurance to stop took several months. (She is already a vet and Obamacare has raised premiums)


We have been racing very hard to get debt free but I gotta tell you, I don't know if we can get it done before something else collapses in the financial system overall. All the signs we can see looking from outside in as a person knowing nothing about the markets things have been bad for months and years.

We can only stand to eat beans and tuna for weeks and months conserving our consumption costs.


One big reason we want out of debt is when gas goes from 3.00 to 7.00 due to war with Iran or something else, we can still fill the car and keep going to work each week. If we still carry this debt and the gas doubles per gallon? We would not afford to keep our jobs.


*Shrugs. Chains you can believe in.

unionbroker's picture

no!!!! turn the machines back on i want to pay more

HEHEHE's picture

The set up was there for a relief rally given the sentiment being so negative and likelihood of shorts putting in tight stops over the long weekend.  I just sit and laugh.  There's not a single positive in macro-land currently; even all the "mixed signals" claim is complete bs. Everything is negative. 

JR's picture

Saw this  in the Editors’ Mailbag on (Eugene, OR) today:

Losing money in modern America

I receive 0.09 percent interest on my checking account, 0.25 percent on my savings account, 0.40 percent on my high-yield savings account and 0.86 percent on my money market account.

I pay 13.49 percent interest on my bank credit card, 19.24 percent on my bank cash withdrawal and 29.99 percent for 30 days on a three-day late payment, plus a $39 late fee. All of this when we are giving the banks interest-free money.

Virtually all credit cards encourage a minimum payment so they can charge you 15.24 percent or more interest on the remaining balance. Many have shortened the payment time from one month to two weeks and now charge $5 to send a bill. Slick move.

Recently premiums were raised on my Medicare supplemental insurance, my co-pay was increased 150 percent, and I was also charged a deductible of 38 percent. I ended up paying approximately 60 percent of the bill. I called Medicare and found out it paid approximately 75 percent of the bill. So the insurance company is actually raking off money on each transaction!

All of this is aggravated by the fact that you can’t talk to anyone that has authority to correct their actions. You must file a written claim, no e-mail. Most people give up and don’t write. Which again appears to be their purpose.

I’m not alone. These issues have become pervasive. What I am sure of is we should be rebelling en masse over these corrupt practices.

Donald Driscoll


trillion_dollar_deficit's picture

Jeezus Khryst at the revision...