Surge In Non-Revolving Loans And Government Lending Pushes Consumer Credit Higher, Even As Revolving Loans Drop Most Since January 2010
A casual look at just the headline at total consumer credit, which increase on a SA basis for the first time since January 2010, could give on the impression that all is well in borrowing land, and that consumers have finally stopped deleveraging. Wrong. While the seasonally adjusted number indicated a rise of $1.1 in total credit the true story once again lies below the surface. To wit: revolving credit, or actual credit as represented by credit card borrowings, plunged by $8.3 billion, the most in 2010! What offset this was the surge in non-revolving credit, which increased by $10.4 billion in September: the biggest increase since August 2007, just before everything went to hell. Note the glaring move higher in September non-revolving credit (i.e., borrowing for car and school loans).
Regardless, revolving credit tells the story. Everything else is merely aimed at stimulating auto sales and pushing the SAAR to over 12 million. It's not like anyone expects any loans will ever be repaid anyway.
And looking at the sources of credit in September, and over the last 6 months, presented below, speaks for itself. Two words: Federal Government.