This page has been archived and commenting is disabled.

98% Of Q1 Consumer Credit Was Used For Student And Car Loans

Tyler Durden's picture




 

By now everyone realizes that Q1 will be the second consecutive first quarter to see a negative GDP print. Wall Street's weathermen formerly known as "economists" have been quick to scapegoat harsh weather once again for this unprecedented "non-recessionary" contraction in the US economy, however what the actual reason for the drop is irrelevant for this specific post; what is relevant is that even in a quarter in which US GDP is set to decline consumer credit, according to the latest update from the Federal Reserve, increased by just over $45 billion. But how is it possible that with such a massive expansion in household credit there was no actual benefit to the underlying economy?

Simple: 98% of the credit lent out in the first quarter, or $44.3 billion, went to student and car loans!

The amount of credit that actually made it into the broader, consumer economy, i.e., credit card or revolving credit: a negative $600 million, despite a jump in revolving credit in March, when it rose by $4.4 billion to $889.4 billion.

 

So $889.4 billion in credit card debt: as a reminder this is the key credit amount that has to keep growing for consumers to telegraph optimism about their wages, jobs, and generally, the economy. The problem is that as of Q1, this amount was lower than both car debt, at $972.4 billion, and certainly student debt, which in Q1 rose by another $30 billion to a record $1.355 trillion!

 

In other words, virtually every dollar lent out in Q1 went to such dead-end uses as bailed out General Motors and student loans keeping an entire generation away from the harsh reality of the labor market.

But the most troubling discovery in Q1 is that as we reported last month, America's consumer banks, i.e. depositor institutions, have shut down the lending spigot after seeing a jump in consumer bank lending in 2014. In fact, in the first three months of 2015, depository institutions saw a $32 billion decline in the total amount of credit lent out. So who did lend? Why the US government of course, which was the source of over $39 billion in consumer credit, or the vast bulk, lent out in the first quarter.

In other words, the US government lends out cash, so US consumers can either buy cars from Government Motors in one truly epic circle jerk, or stay in the safe, ivory tower confines of college, and avoid the reality of what is really going on with the US economy.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 05/07/2015 - 15:43 | 6070173 NoDebt
NoDebt's picture

If we can indoctrinate just one more child into believing in big government, it's worth it, no matter the cost.

You could lay a straightedge across the tops of those student loan bars and probably not get 2-thou feeler gague under it at any point. 

Thu, 05/07/2015 - 15:43 | 6070188 SethDealer
SethDealer's picture

clearly we need more taxes

Thu, 05/07/2015 - 15:44 | 6070196 CH1
CH1's picture

And WAY more regulation!

Bureaucrats know best!!

Thu, 05/07/2015 - 16:07 | 6070298 Richard Chesler
Richard Chesler's picture

Remaining 2% was used for Obozocare.

 

Thu, 05/07/2015 - 17:13 | 6070391 Stoploss
Stoploss's picture

We need a Federal Healthcare Loan Corp...

 

Fatty Mae...

Thu, 05/07/2015 - 16:35 | 6070416 KnuckleDragger-X
KnuckleDragger-X's picture

Well the new college grads need cars to their barista jobs.....

Thu, 05/07/2015 - 17:03 | 6070503 Tek Kinkreet
Tek Kinkreet's picture

Wish I could get a loan for all the equity I now have in my bubble price inflated home, I could use it to pay the skyrocketing taxes! Money just keeps getting tighter and tighter for us plebs. Any gas savings was taken by Obamacare sending healthcare prices skyrocketing and I just had to buy an updated a/c system mandated by an international treaty forcing the replacement of one refrigerant with another that turns out is no better for the environment and will also be mandatorily phased out. Ramen is on the menu for the next 2 months. Seems all the government does now is figure out how much extra money people will have so they can figure out some way to take it, leaving everyone perpetually treading water.

Thu, 05/07/2015 - 17:46 | 6070642 ZH Snob
ZH Snob's picture

great.  one is for a depreciating asset and the other is for poor, young people who work, get indebted and can't find a job to repay it.  they don't understand the mean times they live in.

Thu, 05/07/2015 - 15:42 | 6070179 Clueless Economist
Clueless Economist's picture

Please join the Southern Poverty Law Center's fight against extremists.  Join the SPLC and work to exterminate its list of 388 hateful, right-wing, white nazi HATE groups.  Thank you

Thu, 05/07/2015 - 15:44 | 6070197 IntercoursetheEU
IntercoursetheEU's picture

Sure, but can we add hateful, left-wing, white lib-tard nazi socialist HATE groups like the SPLC?

Thu, 05/07/2015 - 16:17 | 6070327 seminal1
seminal1's picture

The Southern Poverty Law Center is a hateful, left-wing extremist hate group that is funded in part by George Soros. 

http://www.discoverthenetworks.org/viewSubCategory.asp?id=1237

http://sorosfiles.com/soros/2012/05/the-soros-supported-southern-poverty...

Thu, 05/07/2015 - 17:43 | 6070632 DutchBoy2015
DutchBoy2015's picture

SPLC= KikeRoaches

 

Thu, 05/07/2015 - 17:15 | 6070552 Stoploss
Stoploss's picture

As soon as we finish killing those Liberal cocksuckers that caused the Southern Poverty in the first place, we'll get right the fuck on that...

Thu, 05/07/2015 - 15:43 | 6070189 williambanzai7
williambanzai7's picture

Thu, 05/07/2015 - 15:46 | 6070206 Bioscale
Bioscale's picture

Very nice. First I was thinking why the desert..

Thu, 05/07/2015 - 15:57 | 6070261 Mike Honcho
Mike Honcho's picture

With that amount of practice, rarely in the sand

Thu, 05/07/2015 - 18:25 | 6070779 Joe Sichs Pach
Joe Sichs Pach's picture

First thing I saw was Ivy Mike.

Coulda sworn there was a mushroom cloud in there

Thu, 05/07/2015 - 21:33 | 6070253 Salsipuedes
Salsipuedes's picture

Are those the fake chemtrails he'll hologram over his retirement pad in Rancho Mirage (was there ever a better name for a town for him?) so he can say he and Mike are still regular folk?

Thu, 05/07/2015 - 15:58 | 6070270 NoDebt
NoDebt's picture

The golf course backround is cool, but I like the "Cheshire Cat" teeth.  Only part you can't see the backround through.

 

Thu, 05/07/2015 - 16:33 | 6070408 Occams_Chainsaw
Occams_Chainsaw's picture

Most...transparrent.....EVER!

Thu, 05/07/2015 - 17:47 | 6070647 ZH Snob
ZH Snob's picture

to live is to golf.  all the rest, a distraction.

Thu, 05/07/2015 - 17:57 | 6070688 Tek Kinkreet
Tek Kinkreet's picture

He can hope and change this...

Fri, 05/08/2015 - 00:58 | 6071828 franciscopendergrass
franciscopendergrass's picture

That's not the transparency I was looking for in Obama

Thu, 05/07/2015 - 15:44 | 6070200 Tortfeasor
Tortfeasor's picture

Had a client come in to talk about defending a foreclosure trial. She's on disability because of scoliosis, and so is her daughter. She admits to being a student loan queen. Wants to pay me in three weeks when her next student loans come in. Already filed and completed a chapter 7 bankurptcy. Using her student loans to pay off her credit cards.

"Why are you going into MORE DEBT after just getting out of chapter 7? Don't you know you can never discharge those debts?"

"Well, it won't matter when I'm making a million dollars a year."

She's finishing her second bachelors, and getting ready for her masters and doctorate degrees. Probably in public service of some such. I just ended the interview there.

Thu, 05/07/2015 - 15:49 | 6070224 astoriajoe
astoriajoe's picture

http://en.wikipedia.org/wiki/Permanent_income_hypothesis

perfectly legitimate idea to take on debt as a student. Milton Friedman says so. 

Thu, 05/07/2015 - 17:14 | 6070551 greenskeeper carl
greenskeeper carl's picture

The fucked up thing is that it will probably work for her. She will be in public service, after all. Here is all she has to do:
1. Run up as much debt a possible getting lots of degrees, since many public services jobs will pay you more automatically for a masters/ doctorate(debt will be forgiven)
2. Have a couple kids, but never get married(you'll see why below)
3. Apply for single mother day care assistance. You won't have to pay hardly anything out of pocket
4. Apply for pay as you go for the student loans, they will be completely forgiven after 10 years of being on time with you payments, which will probably be 'zero' a month because
4. As a single mother, head of household, your household income will be low enough to not owe anything.

As fucked up as it all is, she will probably be correct in her assessment of the situation.

Thu, 05/07/2015 - 15:51 | 6070238 Salsipuedes
Salsipuedes's picture

If she'd said the "Private Sector" I'd agree...However....

Thu, 05/07/2015 - 15:55 | 6070252 NoDebt
NoDebt's picture

I know people like that.  Somehow they always game more money out of the system.  They always think they can snatch the cheese without the trap slamming shut on them.  And what annoys the shit out of me is that they usually do.  I don't know how, but they never seem to suffer the consequences that would surely bite people like you and me in the ass.  Professional cockroaches.  Only two things stop them:  death or prison.

Thu, 05/07/2015 - 16:00 | 6070277 Tortfeasor
Tortfeasor's picture

I just really don't care much. Cockroaches eat trash. She's living in constant fear (or should be) and I'm sure she eats, and lives, like shit. But she'll never do more than live on government cheese. 

And government cheese tastes like ass.

Thu, 05/07/2015 - 17:16 | 6070561 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Good to know who on Z/H knows what 'government cheese' and 'ass' tastes like, this will be placed on your permanent record, T.

Thu, 05/07/2015 - 16:42 | 6070445 gimme soma dat
gimme soma dat's picture

I am in my 30's now, but when I was in college a lot of my friends would take out additional student loan money just for fun stuff.  I'd say, you have to pay that back, you know that?  Their answer was always something along the lines that "in the future they'll be making so much money it won't matter."  Now that we're older, I've learned that they all can't pay back their loans, but all you have to do is call say you can't pay.  They'll give you a deferment or lower your payment.   

Thu, 05/07/2015 - 15:45 | 6070203 astoriajoe
astoriajoe's picture

No mention of someone taking a shit in the SHAK today?

Thu, 05/07/2015 - 16:12 | 6070317 NoDebt
NoDebt's picture

Check the market summary article.  It did get a good ass-whipping, didn't it?

Thu, 05/07/2015 - 15:49 | 6070225 Salsipuedes
Salsipuedes's picture

Having PHDs in Psychology carting me around in their Ubermobiles with leather seats and vomit bags is NOT my idea of progress! MOAR Robots!

                         Chang, Palo Alto

Thu, 05/07/2015 - 15:50 | 6070229 debtor of last ...
debtor of last resort's picture

Labor market? There's no market. BTW, this is a good read: http://ourfiniteworld.com/2015/05/06/why-we-have-an-oversupply-of-almost...

Thu, 05/07/2015 - 15:56 | 6070259 101 years and c...
101 years and counting's picture

student loans are the new credit card.  get a loan, buy an iPad for "school".  and a new 50" tv.  and a new phone every school year.

Thu, 05/07/2015 - 15:57 | 6070264 corporatewhore
corporatewhore's picture

tick, tock......something about to go belly up

Thu, 05/07/2015 - 16:07 | 6070293 wmbz
wmbz's picture

I would love to know what the percentage of car "buyers" is the "how much a month" crowd.

I talked to a fellow some months ago that bought a new gubmint motors truck on the 0 down 60 mo. payment plan because it was such a "good deal". I am certain he has no idea what the total he will pay back is. Forget depreciation, these folks just don't think that way. "Had to have it" and it's only xx a month.

Of course gubmint motors sells thousands of vehicles to the taxpayer via gubmint.

Thu, 05/07/2015 - 17:01 | 6070502 RafterManFMJ
RafterManFMJ's picture

Yea I hear ya.

Got a friend, new hire, paying 680 per month of some such shit on a Ford Sooper truck and it's killing him, especially since he bought a house (which was a sensible price) and we're barely one step above unemployment right now.

I told him to "accidentally" drive it into a lake, ditch the payments but he won't.

As for me, imma pick up a new CX5 later in the year, loaded, with no money down and no trade - and ... Fuck em.

If I can't pay, come and get it - it'll be viewed by me as a lease.

Thu, 05/07/2015 - 17:08 | 6070525 Tek Kinkreet
Tek Kinkreet's picture

You're a true patriot because that's the shit that will bring this baby down.

Thu, 05/07/2015 - 18:10 | 6070737 Dixie Flatline
Dixie Flatline's picture

I would love to know what the percentage of car "buyers" is the "how much a month" crowd.

 

 

It has to be a huge percentage.  The first question out of every auto salesman is "What kind of payments are you looking at?"

Thu, 05/07/2015 - 16:07 | 6070295 Billy Sol Estes
Billy Sol Estes's picture

I eagerly await student loan debt to breach the 50% mark of Student debt vs US Debt of $18 Trillion. Both are growing exponentially, but I think student debt can pass ol'Uncle Sam.

Thu, 05/07/2015 - 16:11 | 6070308 bigmikeO
bigmikeO's picture

One of the tricks the government uses...

Automatic student loans that you have to OPT OUT OFF!

Just learned this when my daughter got her papers back from college. We had to send a letter in writing to opt out of an automatic $5,500/year @7% interest loan. Assholes.

Thu, 05/07/2015 - 16:32 | 6070400 Billy Sol Estes
Billy Sol Estes's picture

And Government wants to shutdown the payday loan lenders for being predatory....PROBABLY BECAUSE THEY COMPETE WITH THE GOV!

Thu, 05/07/2015 - 16:19 | 6070341 Tsar Pointless
Tsar Pointless's picture

So what? I just opened a Samuel Adams Summer Ale.

Thu, 05/07/2015 - 16:21 | 6070350 80 years are up
80 years are up's picture

How many ways are there to spell F--ked.  Every day is more shocking than the last.

Thu, 05/07/2015 - 16:22 | 6070356 Tsar Pointless
Tsar Pointless's picture

It's not if you've drank enough and have become numb to it all. Comfortably numb, in fact.

Thu, 05/07/2015 - 16:32 | 6070399 astoriajoe
astoriajoe's picture

At the end of it all, congress will be begging their constituents to legalize weed.

Thu, 05/07/2015 - 16:56 | 6070484 Stormtrooper
Stormtrooper's picture

I wonder if I can get enough student loans to replace my current salary.  Then I could retire and take a couple of classes in pottery making but spend most of my time fishing and camping.  If I can drag that out for about 10 years I can then get a degree and get a payment deferal for another 10 years while I search for a job in my field (but draw Social Security).  After that I should be dead and the only thing that they will be able to reposess is my coffin.  And I can even pay the undertaker to rig the coffin to give someone a very bad day when they dump me out for the reposession.

Sounds like a solid plan.  How do I apply?

Thu, 05/07/2015 - 17:11 | 6070535 Tek Kinkreet
Tek Kinkreet's picture

We can't hand out loans to just anyone ya know! Checks are ya breathing? ~showers you with money~

Thu, 05/07/2015 - 16:48 | 6070460 Mr. Bystander
Mr. Bystander's picture

How's this for a circle jerk? Students borrowing more than they need for college and purchasing autos with the difference.

Thu, 05/07/2015 - 17:12 | 6070540 Tek Kinkreet
Tek Kinkreet's picture

Bukakke for everyone!

Thu, 05/07/2015 - 17:28 | 6070590 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

My Canadian made GM sedan has 215k and is 18 years old now. I'm going to crawl under my car on the weekend and weld some new muffler mounts onto my 18 year old stainless steel muffler because the mounts are rusted and were not stainless to begin with. I should get another decade at least out of my car before I replace it with a used car in the future. No bank has ever suckered me on a car loan in my lifetime. And like my old man used to always say....

 

"It's just nicely broken in".

 

:|

Thu, 05/07/2015 - 17:35 | 6070605 DutchBoy2015
DutchBoy2015's picture

Careful you may be labled a communist or socialist in the USA.   You MUST spend, to save the country.  If you aren't a debt slave you are a terrorist.

Thu, 05/07/2015 - 17:52 | 6070671 DutchBoy2015
DutchBoy2015's picture

What are you going to do when the gubmint mandates all cars older than 10 years to be off the road or you get a HUGE fine.??

Thu, 05/07/2015 - 17:48 | 6070654 DutchBoy2015
DutchBoy2015's picture

There are some nice islands in the Indonesian chain that you can buy for about 10k , servants included.

Load up on CC's, student loans.  max out the cards for cash.  Get all you can together and hop on a plane and neverr look back.

 

Thu, 05/07/2015 - 17:50 | 6070661 DutchBoy2015
DutchBoy2015's picture

The US govt is now garnishing Social Security payments. for studen loan payback.   Seeing as the Baby Boomers retiring more and more , you can excpect lots of whining when their SS is hit.

Thu, 05/07/2015 - 17:50 | 6070662 DutchBoy2015
DutchBoy2015's picture

The US govt is now garnishing Social Security payments. for studen loan payback.   Seeing as the Baby Boomers retiring more and more , you can excpect lots of whining when their SS is hit.

Thu, 05/07/2015 - 17:58 | 6070693 Midnight Rider
Midnight Rider's picture

A very large percentage of that "student loan" money is being spent on living expenses, not college tuition and books. Take one course at Junior Space Academy Online Community College and qualify for massive amounts of student loans to live on. Of course all the pizzas this money is being spent on "supports the economy" while we go through this temporary rough patch. So, it's worth it.

Thu, 05/07/2015 - 18:03 | 6070706 DutchBoy2015
DutchBoy2015's picture

Temporary rough patch until WW3 starts and the draft is reimposed.  Here is your rifle.  you student loans will be written off if you go infantry.

Thu, 05/28/2015 - 02:33 | 6139051 brookehiggins007
brookehiggins007's picture

Spend such huge ammount for srtudent loans are is good but car loan amount should be reduced.

luton airport parking

Do NOT follow this link or you will be banned from the site!