Consumer Credit Has Second Highest Monthly Increase In Two Years

Tyler Durden's picture

As if predicting the jump in interest rates in June, consumers took advantage of cheap credit conditions two months ago to load up on debt, pushing the May Consumer Credit higher by $19.6 billion, well above expectations of a $12.5 billion jump. This was the second highest sequential jump post the consumer credit data set revision, only second to the $19.9 billion from last May. And just like a year ago, revolving credit jumped by $6.6 billion following months of stagnating levels. It did the same in May 2012 when it rose by $6.8 billion when consumers also appeared to be prepaying summer purchases. The balance of credit expansion was once again driven by a surge in student and car loans, which amounted to $13 billion of the total May increase. Whether this credit growth continues into June is skeptical following the jump in interest, and especially following the doubling of the prevailing subsidized Stafford Loan rate which will likely cripple future student loan extraction.

As for the big picture, or where the bulk of this "credit" has come from, the story remains the same. It's all government, all the time as the following chart from @not_jim_cramer confirms.

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Dr. Engali's picture

But CNBS keeps telling me that companies and consumers have been deleveraging. Somebody is lying to me. I better check and see what Cramer says.



Cramer says don't be silly.

icanhasbailout's picture

The pressure always gets released somewhere.

Never One Roach's picture

Who is going to pay their FREE loans back? Silly to think that way these days when you have the Fed (aka, taxpayers) to pay for you.


Don't be a Chump.

ebworthen's picture

Remember folks; bank and corporate debt paid off with your tax dollars - your debt paid off with your assets, your future, and an arm and a leg (though they might take an organ).

jim249's picture

Nothing new here. Consumers spending for spring and summer stuff. Happens every year. Will go back down again.

SheepDog-One's picture

Spending on credit for 'summer stuff'....yea then next it will be 'winter stuff' of course.....gotta have the winter stuff. On credit.

RockyRacoon's picture

Autos and student loans aren't summer stuff -- read the aricle.

Cursive's picture

Thanks to the USG, these needy Amerikans have received an education, an i-pad and a Ford Fiesta.  Sally Strothers would be so happy to know this.

CaptainSpaulding's picture

Barclays is begging me to make a trip to the Apple store. Sounds tempting

Son of Loki's picture

On Friday the mortgage markets had another historical move reaching a multi-year high when it comes to the 30-year fixed rate mortgage rate.  The move was gloriously inspired by an employment report that witnessed a record surge in part-time workers. 

This all seems to fall into the longer term challenges of extreme quantitative easing given that Japan with many years on us in the QE game has an enormous part-time workforce.  Yet this dramatic reversal in mortgage rates is going to impact the market.  To what degree? 

That will be seen but we are already seeing a decline in mortgage applications and of course refinancing activity is slowing down dramatically. 

A big change is going to come in the psychological department.  Many were starting to venture into the market with ARMs but with rates rising, these affordability products are now much more risky.  Also, the amount someone can buy has just been squeezed (around 30 percent) with the recent move in the mortgage markets.

MedicalQuack's picture

The banks just can't be happier as they will have more credit card data to sell to the health insurers too...see where Blue Cross is watching to see if you are buying clothes that are a size larger and United buys a ton of it too.  Of course that was a weak example but it's what Blue Cross said, and we know the data gets queried with what ever else they may have in house and in a couple weeks you see new compliance or intel analytics out there for's the domino insurers want you to keep spending too so they can get more data about you..with no regard for flaws or accuracy...they just keep rolling in the billions...

Add that to the junk food data they buy...

Time to license and excise tax the data sellers, all of them, banks, credit agencies, name it as the domino effect keeps going with the data selling epidemic for profit..more data... more money they they want to keep that debt collect that data to sell and resell...wonder why insurance policies are so high?

Element's picture

but ... no one even saw it coming ...


Dec 2012:

World risks fresh credit bubble, Switzerland's BIS warns


Asset prices across the world have risen to heady levels not seen since the credit boom five years ago and may be losing touch with economic reality yet again, the Bank for International Settlements has warned.


... move along ... we're watching over you citizen ... there is no danger ... move along ... freakin worry-warts ... that's right, move along ...