Consumers Hit The Brakes: Smallest Increase In Consumer Credit In 6 Years

Tyler Durden's picture

In the latest red flag for the US economy, moments ago the Fed reported that consumer credit for the month of April rose a paltry $8.2 billion, barely half the consensus estimate of $15.5 billion, and 40% of march's $19.5 billion. This was the lowest monthly increase in consumer credit going back nearly 6 years to August 2011. The increasingly obvious downward trendline in crediting is hardly indicative of a confident consumer.

While revolving, i.e. credit card, debt rose a modest $1.5 billion, far below the increase in the prior two months...

... it was the sharp slowdown in non-revolving consumer credit, which rose just $6.7 billion, suggesting that either student or auto loans had virtually ground to a halt.

While the reason for the unexpected sharp slowdown is not immediately clear, a chart of sources of consumer credit reveeals that the US government, long a dominant source of consumer debt, has virtually disappeared.

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CPL's picture

"brakes" on credit growth = dead people don't use credit...just sayin.  It's not the pool of credit that's drying up...

NotApplicable's picture

If only there was a borrower of last resort to keep all of the plates spinning.

JRobby's picture

We are done

Call me in September if you have some "pre-owned" cars that you don't have any room for. I will see what I can do for you.

Vlad the Inhaler's picture

Only $8.2 billion in new credit, sad!  Janet will have to figure out a new way to coerce people to spend money they would rather save.

Endgame Napoleon's picture

Save....ha ha....People do not have money to spend on extras from temp jobs at $10/hr unless they are being paid by "Uncle Scam" to copulate and reproduce, adding welfare/taxfare to their low, unreliable, earned income streams.

Peacefulwarrior's picture

You mean coerce people to spend money they don't have to save?

JRobby's picture

A video of Janet and the rest of the FED Governors careening into the gut of one of those giant sand (spice) worms the way Vlad Harkonen did would lift consumer spending instantly.

hedgeless_horseman's picture

 

While the reason for the unexpected sharp slowdown is not immediately clear...

His name was Dave Ramsey.

NoDebt's picture

The same guy who was telling everyone to go out and buy a big house with borrowed money in 2006-2007?

 

hedgeless_horseman's picture

 

This article is on consumer credit, not mortgages. 

Regarding buying a home, he advises to rent while saving up for the down payment plus an emergency fund, then get a fixed 15 year or shorter mortgage and work hard to pay it off early.

I am not in agreement with all he preaches and sells, but his program does get people out of debt.

corporatewhore's picture

I have seen big price reductions in real estate homes beginning this week.  All is not well in bubble land. 

CRM114's picture

Rural Canada. Cheaper homes (anything under $110k) needing work are selling in 24 hours, whereas they used to be on the market for 24 months. Houses costing $300k+ are being thrown up at record pace. Nothing in the middle is moving.

So, the bubble is still expanding, but the basket below has fallen off.

In this case it has relevance to consumer credit, since the poorer buyers are now mortgaged up to their eyeballs (I'm buying also, and have heard of several deals fall through because they couldn't get the mortgage, which never used to happen) AND are having to spend their spare cash on house reno work. AND the building materials prices are inflated because of all the rich homes going up.

CJgipper's picture

Uh, nope, not the same guy at all /confused/

 

Do you even know who Ramsey is?

Endgame Napoleon's picture

Interesting, when I had a custom luxury-item shop, some of the stay-at-home moms came in with envelopes. Even some who were married to very high-earning professionals saved up to buy something that was designed exactly to their taste once in awhile via this method. They said it just helped them keep track of these purchases. Back in the mid to late Nineties, in city galleries, the nouveau-riche, two high-earner couples swiped plastic with abandon, whereas the old money wealth paid with checks. My shop was in a more rural area, but still had some of the same clientele.

Big Fat Bastard's picture

How about a warm welcome to Big Fat Bastard

NoDebt's picture

Go fuck yourself.  ;)  Welcome to ZH.

 

Big Fat Bastard's picture

Now that deserves one million green arrows!

Angry White Guy's picture

"Not enough people are using fake money they don't have to buy shit they don't need?!" <- Jewish emergency of epic proportions.

Endgame Napoleon's picture

Well, when people have stable employment, they can save for luxuries, but that is not what people have been doing over these decades, mostly due to the FAKE employment opportunities. Temp, part-time and churn jobs at $10/hr, with staffs almost entirely composed of moms on welfare/taxfare or moms with spousal income or child support that covers rent and other basic bills, are NOT real jobs. They are akin to a teenage babysitter whose parents finance her major household bills.

CRM114's picture

I've just moved a long distance, and so am buying a ton of stuff. Judging by the prices, I'm the only one who is. Up here in the Great White North, the prices of stuff like quality workboots, dehumidifiers and garden carts are way down even on two years ago. The RSP is the same, but the discounts are huge. The kind of stuff you'd buy if you had a little more cash. Conclusion; almost nobody has a little more cash. The retail staff in the big boxes are on the side of the consumer - they'll tell you when all the good deals are without you asking. Some great stuff I would have bought today I will now buy on Friday, and get another 20% off.

The stuff the poor have to or love to buy is still inflating. By way of contrast, in my local convenience store, 5oz of chips is $3.50, and 5oz of lovely ribeye steak is $5. This is crazy.

The prices the rich pay are also inflating. Quality building materials and high end smartphones, top quality fashion.

The middle class is dying quite rapidly, I think.

Omen IV's picture

Just did the same thing for purchase of  multiple small appliances which i bought two years ago for another home - all down in cost - i shopped the deals but it is clear the demand is not there

NotBuyingIt's picture

Hmmm...could this be an indicator of (or at least correlated with) the fact that the American people are waking up to what a bunch of scum sucking lowlifes these psycopaths are that run the banking industry. As for myself, getting gangstalked by BofA for 5 years did it for me! I'm staying as FAR away from credit as I can GET! I do not want these skeevy lowlifes in my life at all - ever again. No Fucktards, you do not need to know my SSN, my FEIN, my phone number or anything at all about me.

Couldn't give one shit about my credit score. Car and house are paid off. When I need another car, I'll pay cash. I'm never giving these fucking scumbags another penny of usury. Fuck the HELL OFF, Bankster douchebags. Fuck the HELL OFF! (Wow, that feels good :-)

CJgipper's picture

Nope.  If you give them more credit, they'll take it.

 

It's the fact that the payments now exceed the income and the balance rollover offers are dead.

I am Jobe's picture

When housing collapses wake me up, espcially in Austin, Round Rock, Dallas.  Houston is already getting there. Also don't forget to close schools , enough of the fucking bond measures. Children my azz. Parents can pay for their education 

STUDY BY MIT ECONOMIST: U.S. HAS REGRESSED TO A THIRD-WORLD NATION FOR MOST OF ITS CITIZENS

https://theintellectualist.co/study-mit-economist-u-s-regressed-third-wo...

 

Don;t forget it is for the Children and Pensioners

Big Fat Bastard's picture

It's just a matter of time my good friends. Just a matter of time. A 75% decline is necessary just to get back to long term trend.

kenlej's picture

The War Is Being Won http://www.dinardaily.net/t64229-the-war-is-being-won …  Qatar is being attacked because they put out a bounty on Trumps head All of it is coming together now 

imapopulistnow's picture

Prehaps delays in tax refunds this year has something to do with this.

decentralisedscrutinizer's picture

 

Almost all the world’s economic and political problems revolve around the hegemony of a global corporate cartel, which is headquartered in the US because this is where their dominant military force resides. The US Constitution is therefore the “kingpin” of an all-inclusive global financial empire. These fictitious entities now own the USA and command its military infrastructure by virtue of the Federal Reserve Corporation, regulatory capture, MSM propaganda, and congressional lobbying.

 

The Founders had to fight a bloody Revolutionary War to win our right to incorporate as a nation – the USA. But then, for whatever reason, our Founders granted the greediest businessmen among them unrestricted corporate charters with enough potential capital & power to compete with the individual states, smaller sovereign nations, and eventually to buy out the USA itself. The only way The People can regain our sovereignty as a constitutional republic now is to severely curtail the privileges of any corporation doing business here. To remain sovereign we have to stop granting corporate charters to just any “suit” that comes along without fulfilling a defined social value in return. The "Divine Right Of Kings” should not apply to fictitious entities just because they are “Too Big To Fail”. We can't afford to privatize our Treasury to transnational banks anymore. Government must be held responsible only to the electorate, not fictitious entities; and banks must be held responsible to the government if we are ever to restore sanity, much less prosperity, to the world.

 

It was a loophole in our Constitution that allowed corporate charters to be so easily obtained that a swamp of corruption inevitably flooded our entire economic system. It is a swamp that can't be drained at this point because the Constitution doesn’t provide a drain. This 28th amendment is intended to install that drain so Congress can pull the plug ASAP. As a matter of political practicality we must rely on the Article 5 option to do this, for which the electorate will need overwhelming consensus beforehand. Seriously; an Article 5 Constitutional Convention is rapidly becoming our only sensible option.

 

This is what I think it will take to save the world; and nobody gets hurt: 28th Amendment

 

Corporations are not persons in any sense of the word and shall be granted only those rights and privileges that Congress deems necessary for the well-being of the People. Congress shall provide legislation defining the terms and conditions of corporate charters according to their purpose; which shall include, but are not limited to:

 

1, prohibitions against any corporation;

 

a, owning another corporation,

 

b, becoming economically indispensable or monopolistic, or

 

c, otherwise distorting the general economy;

 

2, prohibitions against any form of interference in the affairs of;

 

a, government,

 

b, education,

 

c, news media, or

 

d, healthcare, and

 

3, provisions for;

 

a, the auditing of standardized, current, and transparent account books, and

 

b, the establishment of a state and municipal-owned banking system

 

c, civil and criminal penalties to be suffered by corporate executives for violation of the terms of a corporate charter.

    

JRobby's picture

"Almost all the world’s economic and political problems revolve around the hegemony of a global corporate cartel"

The level of genius is off the chart, tripping balls, mind blowing!

decentralisedscrutinizer's picture

You should read the rest of it. It's like sniffing glue, you'll love it! 

decentralisedscrutinizer's picture

I'm sorry. Am I in your parking space?

rrrr's picture

Wake me when it's the smallest increase in consumer credit in 100 years.

John McElroy's picture

If only Congress could do the same.

moonmac's picture

Sub Prime Auto Loan Lending came to a screeching halt after rising delinquencies were reported by Credit Agencies which also means there’s not a lot of gas being consumed while deadbeats hide their cars in garages from the Repo Man.

Mr. Augie's picture

The (((Banksters))) have "worked" themselves into a tight corner with the slave-, debt- and war-driven economy. They need people to take out more loans to buy the cheap chinese junk to sustain growth they need to make more money. When we go deeper into debt it "creates" more money to loan out and when this money gets spent it allows workers to work and to be able to pay the interest on their loans. Biggest scam going.

Five Star's picture

2016 Q4 saw the largest decrease in corporate debt relative to GDP outside a recession since at least the 1980s

http://thesoundingline.com/corporate-debt-posts-biggest-quarterly-declin...

ThrowAwayYourTV's picture

Banks are not lending to individuals. I have a credit score of 830 and $1000 expendable cash floating around in my wallet every month and the bank has turned me down over and over with the same excuse. "Debt to income ratio." Ha! and yet I get credit cards with 15 and 20K on them.

Thats ok, I will continue to use the credit card checks and pay them off over and over and over. Been working just fine for me.