December Revolving Credit Slides By Most Since July As Student Loans Surge By A Record

Tyler Durden's picture

If anyone was hoping that in the peak holiday month of December the US consumer would finally open up the purse strings and "charge" everything, we have bad news: in the last month of 2012 revolving consumer credit dipped by some $3.6 billion, a reversion of the modest increases seen in November and October, and the biggest decline in credit card debt since July of 2012. Yet overall consumer credit rose by some $14.6 billion and beat expectations of a $14 billion increase. Why? Because as we have been warning for quite a while, everyone is now piling into student debt (and NINJA Uncle Sam subprime car loans). Sure enough, non-revolving credit soared by $18.2 billion in December - a monthly record for this time series since its revision several months back - and shows that when it comes to levering up, few are using their credit cards, as increasingly more opt to rotate proceeds from their "student loans" into everyday purchases.

And so we end 2012 with a total increase in consumer credit of $146.7 billion of which student loans account for... $148.3 billion.

In other words, credit debt once again declined in 2012 but not because of "deleveraging" but merely because the US consumer has once again found the greatest fool around with the biggest credit card - Uncle Sam.

The same table as above shown on a Not seasonally adjusted basis, by key holders of debt:

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Bam_Man's picture

The only problem with Student Loans from Uncle Sam is THEY HAVE TO BE PAID BACK. No "walking away" or discharge through bankruptcy. These fools will eventually have the IRS on their backs and have their Social Security/Disability benefits garnished. Penalties and interest are a bitch, bitchezzzz!

RhoneGSM's picture

And when it suits their purpose, that rule will conveneintly change.

trav777's picture

the rule will change for connected classes.  Aka minorities.

The people who are the real tax slaves will be expected to just cash in their "privilege" and be good racist-americans and pay back what they "stole."

These kids are in for it...really.  But their delusional, mental 3rd rail parents should have done a better job on accepting reality instead of pretending the truth didn't exist.

Who was it who recently said that the State should subsidize STEM and the libtard arts majors savaged him?  They bristled at the notion that their degrees were somehow worth less than, like, a real degree in some real subject area.

You aren't allowed to even call fake sh!t "fake sh!t" anymore without having to apologize and pretend like you can't see reality the same as they can't.

Herd rules.

Dollar Bill Hiccup's picture

They're waiting for your apology bud.

James_Cole's picture

"Who was it who recently said that the State should subsidize STEM and the libtard arts majors savaged him?"

Not to say it's good or bad but the state has always subsidized STEM heavily (hello MIT???).

The student loan "crisis" is another ridiculous manufactured bunch of nonsense, just like everything that's gone under the gun of bubblicious wall street.

ACP's picture


Yeah, pretty much shit made up to collect money from dumb asses who otherwise don't have the mental capacity or motivation to attend college.

TruthInSunshine's picture

Only in a fucked up, warped economic structure, cheered on by lunatics like one Paul "When Mars Attacks" Krugman, could the prolific use of further debt instrument transactions (not only furthering debt servitude, but merely pulling future demand forward, to set the table for future rounds of at-least-as-large-if-not-larger deleveraging-- mainly via defaults) be viewed as a healthy "thing," especially amongst a broke-dick sea of "consumers":

Consumer Debt Hits New All-Time Record (as of 4 months ago, not 6 years ago! Deleveraging, my ass!)
Being Free's picture

And when it suits their purpose, that rule will conveneintly change.

The changes are already underway.  One example...

A group of vote/campaign fund seeking state representatives in Michigan (these happen to be of the D persuation) just introduced a bill to make payments made against student loans a refundable state tax credit.  (

Not just the interest on the, 50% of all payments of principal and int.  And it would be a "refundable" credit, i.e. if your tax liability is less than the credit, the state (that is the other taxpaying sheeple) will send you a fucking check.

"It's all free bitchez!  Come and get it.  Just vote for me."

willwork4food's picture

I guess this was a bad time to enroll at Pheonix University online and use a portion to check out Vegas? Isn't call gir- I mean client entertainment costs tax write-offs?

Mike2756's picture

That falls under a research grant.

jcaz's picture

Nah, they're actually dischargable after 20 yrs, but doesn't matter-  the current administration will get tired of trying to collect and change the law, making student loans as easy to duck as Citibanks-  that will be their "solution" to the bubble....

Renewable Life's picture

Nothing congress can't pass a law on, after midnight in a defense appropriation bill!
Problem solved!! Borrow away bitchez!!

On another more interesting note, is anyone else smiling, as LAPD cops start killing each other!!! How do we put "gun control" on those assholes!!

Ness.'s picture

You would think that no one can 'walk away' from these loans but you forgot who we're dealing with here.  My co-worker has worked on Obama's campaigns since his Senate days and he told me that one of BO's favorite topics when speaking to his unemployed college followers is the college loan debt jubilee.


azzhatter's picture

Yep, what's another $1 or $2 T added to the debt? Bennie can finance it at low rates

Dr. Engali's picture

Don't listen to what he says, watch what he does.. All of Obummer's policies have created more debt...not less.

scatterbrains's picture

Sure they can be.. the indentured ones can always agree to serve their country in exchange for a reduction of school debt by guarding oil fields/pipelines in some (insert location where we must bomb a bunch of sand niggas and pillage their oil)

PUD's picture

what the fuck is there to "seasonally adjust"?  It is or it isn't. god damn this shit

kaiserhoff's picture

the better to fuck with the numbers

kaiserhoff's picture

Reminds me of a classic:

The Road to Serfdom

mightycluck's picture

I read this guy's blog and he made a sardonic comment about student loan growth. GOV'T CONTROL, BABY!!!!!!!!!!!

q99x2's picture


Consumer credit rises amid uptick for big ticket items- cars and college.

I can't stop laughing.

Dr. Engali's picture

You beat me to it. I was going to post the same thing.

Shameful's picture

And soon the world of moral hazard and the inevitable student loan bailout.  After all can't have the upper level indoctrination camps shut down...

Motorhead's picture

Can't blame this one on the weather.  Or can we?

q99x2's picture

Screw the cars. I want a house. This can't go on. The DHS must be preparing to use the hollow points soon.

Meat Hammer's picture

Seasonally adjust = correct the bullshit when they're no longer looking.

disabledvet's picture

looks like part of our "Great Recovery" will be closing down the bulk of the US Education establishment too! woo-hoo! rock on Baby Boomers! "Peace Out" bitchez!

Dollar Bill Hiccup's picture

Education is a noble path.

Debt is the path to perdition.

There is an anomaly here.

Aussiekiwi's picture

I do know you can't get blood out of a stone, free money student loan and new car, life is good, when they come to collect, well!, not my fault there is no work, go and talk to Obama about another grant for me or a debt write down, I'm doing fine.

Vashta Nerada's picture

Simple explanation for the revolving credit slide in December.  The people who actually have jobs, and non-subprime credit cards with room on them realized in November that they had better stop spending and start burying assets.

azzhatter's picture

I'm thinking of taking a $60K student loan. There's a course in advanced basket weaving available at a local college. Is it a good deal. I'm sure there is work available for basket weavers. (at Target)

scatterbrains's picture

Might want to take a minor in flint knapping while your at it... by the time the bernank is done with us it aught to be looking like the stone age by then... will come in handy

Dr. Richard Head's picture

I would really like to get my hands on the data/chart of outstanding taxes currently being paid on a payment plan with the IRS. 

ebworthen's picture

David Stockman was just on CNBC talking about the current housing bubble.

Said that first time home buyers saddled with student loans either wouldn't be able to afford that home or would get in over their heads.

Baby-Boomers are going to downsize or trade down.

Combined with what he called "fast money" or "hot money" from hedge funds speculating by buying up homes in short sales/foreclosures - was all creating another huge housing bubble.

He also mentioned FED low rates and QE as warping any kind of real market, and went back to the same FED shenanigans in the S&L crisis period, 2001 bubble, and 2008; and commented that they are yet again creating a bubble.

Each bubble gets bigger and requires more bailouts, lower rates, more QE, and more ignoring of the rule-of-law.


Hey Ben, can you say "CLUSTERFUCK"?

azzhatter's picture

Ben is the very definition of clusterfuck

Tsar Pointless's picture

So did EconoPray outsource its release write-ups to India, too? Check out the great grammatical structure within this release (bold added by moi for emphasis:

The consumer continues to take on new debt at a steady and strong clip but whether it points to rising demand is uncertain. Consumer credit rose $14.6 billion in December vs a revised $15.9 billion in November, vs $14.0 billion in October and vs $12.0 and $19.0 billion in the two prior months.

But the revolving side, that is the credit-card side, to these totals isn't always adding to the total. Revolving credit has been very flat, up a little bit one month and then down a little bit the next and is down $3.6 billion in the latest data.

What is going up is non-revolving credit where vehicle sales come into play, and they have been very strong, but where also student loans are tracked. And student loans continue to climb straight up without much monthly variation.

Income gains for the consumer have been spotty and are bringing down consumer confidence readings. Aside from vehicles, the consumer isn't taking on much debt, a factor that is limiting the contribution from the consumer sector.

ptoemmes's picture

Uneducated and collecting unemployment...$200

Being educated and unemploy{ed|able}...priceless.

For eveything else, there's the FED.

Aussiekiwi's picture

I think the logic goes like this, if you have no money and loads of debt you can't pay anyhow, why not enroll in some crap course and borrow all you can at the same time, your never going to repay it anyhow, might as well pick up a new car as well. If you owe $50k and you have no income anyhow and know you will never ba able to repay it, why not borrow another $100k, makes no difference to the end game, have a good time.

nofluer's picture

Awww... did I spend too late? I meant to make the TBTF banks and corps look good, but I didn't buy my new equip until the end of Jan!!! And it didn't get delivered until this month. So will I make the Big Boys look good for Jan or Feb? I mean, the way they pump up numbers, my little few thousand in equip should show up as twenty or thirty million by the time they get done with it...

Dewey Cheatum Howe's picture

Interesting article on student loans and how the increase is driving down the unemployment numbers. They even use some source material from ZH there to make the case.


I noticed in digging through the line items of today's report that one line item contributed substantially to the overall headline number of 155,000: Education and health services, 65,000.

Anyone see anything wrong with that number? 65,000 is 41% of the total headline number. But think about the "quality" of that number. How much of that number do you think is the result of direct or indirect Government spending, and thus dependent on taxpayer revenue?

Table B of the BLS report, LINK, attributes 55k of that number to "health care and social assistance." Without knowing the breakdown of that number, I think we can assume most of the jobs in that particular category are funded by Medicare, Medicaid and now, Obamacare. Even the private hospital and nursing service companies that would be considered "private companies" and who hire the people in this category have a large portion of their revenues derived from Government reimbursement/entitlement programs.

Let's examine the "education" part of that line item, which does not get further line item detail in the BLS report. I can summarize the quality of that number with two graphs. This graph shows the recent parabolic growth rate in student loan debt

And this graph shows the growth in student loan delinquencies

The total amount of outstanding student loan debt according the latest quarterly Federal Reserve report as of September 30, 2012 was $956 billion, with a $42 billion increase in during Q3: NY Fed. It's safe to say that number is now around $1 trillion.

That trillion dollars in student loans is primarily comprised of loans directly owned by the Federal Government and student loans that are guaranteed by either the Federal Government or State Governments. In other words, a significant portion of education is funded directly and indirectly by the Government/Taxpayer. This means that a significant amount of the employment that makes up the BLS' employment report is directly attributable to Taxpayer funding.

In the context of the accelerating level of student loan delinquencies per the above chart, any respectable financial analyst will admit that the growth in student loans, and therefore the portion of jobs growth that is directly attributable to this significant source of direct or indirect Government funding, is unequivocally not sustainable.

Any job growth connected to the student loan source of taxpayer revenue will not be recurring and will likely reverse when real budgetary austerity is imposed on the Government. Furthermore, to the extent that any healthcare related jobs are directly or indirectly connected to Government/Taxpayer funding, they are not sustainable and any real growth in that area will also reverse.

It thus looks like the Government has engineered another questionable monthly employment report in order to make the headline number appear as if the economy is back on track to economic health. But the truth is that even if the number is real, it is clearly not sustainable unless the Government intends to continue on its path of accelerating spending deficits and new Treasury debt issuance.

Dewey Cheatum Howe's picture

If those unemployment numbers drop significantly as the obamcare exchanges are set up keep an eye on the jobs created in the health care category. If the authorer is correct there should also be a correlation between the education industry jobs and student loans and indirectly though probably not line itemed by the BLS is student work programs, like part time jobs working on campus and stuff like that.

Youri Carma's picture

December Revolving Credit Slides By Most Since July As Student Loans Surge By A Record

Credit-Card Debt Decreased 5.1% in December While Non-revolving Debt Rose 11.5%

So, December Revolving Credit Slides By Most (namely 5.1%) Since July As Student Loans (Non-Revolving) Surge By A Record. (11.5%Non-RevolvingTotal)

rjs's picture

this is neither a monthly or yearly record for student loans; the annual record was set in 2010 and still stands...

rjs's picture

re: "And so we end 2012 with a total increase in consumer credit of $146.7 billion of which student loans account for... $148.3 billion."

$148.3 billion is total Nonrevolving, including car & yacht loans...