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Consumer Credit Posts First Drop Since August 2011 Following Nonsensical Data Revision

Tyler Durden's picture


On the surface, today's G.19 update, aka the monthly Consumer Credit Data, was a big disappointment due to a major miss in consumer credit, which in July dropped by $3.3 billion from $2.708 trillion to $2.705 trillion. The drop was, as always, on a slide in revolving credit, which dropped for a second consecutive month, this time by just under $5 billion, while non-revolving credit, aka student loans and GM subprime debt, rose by just $1.5 billion: the lowest monthly increase in this series since August 2011, when it declined by $9 billion. Expectations were for an increase of over $9 billion. There was a far bigger problem, however. The problem is the spike on the chart below which represents the November to December 2010 transition (source: Fed). What happened there is that 3 months after the Fed revised the consumer credit data last, it decided to re-revise it again. Frankly, at this point nothing the Fed releases has any credibility, as the central planners are literally making up data every three months as it suits them.

This is how Bernanke explains the epic spike in the most recently fudged data:

Because administrative data and comprehensive private data are not available to serve as a sample frame for finance companies, the Federal Reserve developed a procedure for identifying the industry universe of eligible firms within a list sample frame obtained primarily from a third-party private company and, to a lesser degree, from other sources. The CFC questionnaire (FR3033p) was mailed to each company on the list. A large-scale nonresponse follow-up study was designed and undertaken to assess the nature of nonresponse in the CFC as well as the effects of nonresponse on the universe estimate. With the information collected from the CFC and the nonresponse follow-up study, an estimate of the universe of U.S. finance companies with respect to company size and loan specialization was constructed. The subsequent SFC (FR3033s) was sent to all of the identified finance companies in the CFC, collecting detailed information on company balance sheets and receivable portfolios as of December 31, 2010. Analysis weights were constructed for companies in the SFC (after taking into account survey nonrespondents), and the finance company industry universe statistics of balance sheet and receivable portfolios (referred to as the benchmark estimates) were estimated and employed to benchmark the monthly and quarterly finance companies statistics.


Because of the benchmarking process, the G.19 data have been revised from December 2010 forward. Due to changes in the representativeness of the monthly sample since the earlier benchmark in 2005, there are considerable discrepancies in some categories between the pre-benchmarked and the benchmarked estimates. Such discrepancies are reflected in the statistical releases as series breaks in December 2010 (the benchmarking month).  Therefore, the level differences between November and December 2010 due to benchmarking discrepancies do not affect the published growth rates of the corresponding series over this period. Also, analysis weights of the monthly longitudinal sample were re-estimated using the benchmarked industry universe statistics, and the monthly estimates after December 2010 were revised accordingly using the new weights.

In other words, the Fed just made any historical studies looking at consumer credit for data collection purposes impossible due to the embedded break in the continuous data which the Fed itself admits can no longer be reconciled.

And this is a "data set" on which the Federal Reserve of America is basing monetary policy that determines the cost of money in the entire world! Certainly, all this will have a Hollywood ending.

For those curious how this data set looks like post the "estimated" break, here it is . It is largely meaningless.


Broken down by sources of credit, we find that the US government was for the first time in ages, not the primary source of cash, adding just $1.1 billion in NSA debt. 

What is most problematic is that while the SA data was adjusted as per the viagra spike above, the NSA data still have smooth continuity in the Nov-Dec 2010 data. In other words it is now completely made up by some Fed intern.

To everyone making budget decisions based on how the US consumer is treating credit, good luck. You are on your own.


This latest print was the largest 2-month contraction since March 2009...


and the biggest miss in a year...


Charts: Bloomberg

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Mon, 09/10/2012 - 15:27 | 2779462 Conrad Murray
Conrad Murray's picture

Ben Outliar Shalom Bernanke, he eats bullshit for breakfast.

Mon, 09/10/2012 - 15:35 | 2779488 Michael
Michael's picture

"Under normal circumstances I’d say I told you so. But, as I have told so with such vehemence and frequency already the phrase has lost all meaning. Therefore, I will be replacing it with the phrase, I have informed you thusly."
— Sheldon, 4x09 The Justice League Recombination

Maybe this will help;

Matchbox Twenty - Back 2 Good (Video)


Mon, 09/10/2012 - 15:29 | 2779466 Dick Darlington
Dick Darlington's picture

bullish for equities, right?

Mon, 09/10/2012 - 16:00 | 2779589 trebuchet
trebuchet's picture

another reason to QE forward...  this number drop is CORE monetary policy jab in the backside to prompt action

maybe introduce revolving MBS...  if the economy cant make velocity levitate, the fed will do it

maybe they'll extend student loans for repamayment over 60 years, topping up with "borrow 50K get 10K free offers..." 


Mon, 09/10/2012 - 15:29 | 2779469 max2205
max2205's picture

only numbers btfd

Mon, 09/10/2012 - 15:30 | 2779471 lizzy36
lizzy36's picture

Looks like a giant viagra induced erection in a sea of impotence.

Mon, 09/10/2012 - 15:45 | 2779511 RockyRacoon
RockyRacoon's picture

None of it aided by my own buying, Miss Lizzy.  I've been doing my part and trading fiat for silver.  Today's price will look cheap pretty soon.

Mon, 09/10/2012 - 15:34 | 2779486 Darth Silver
Darth Silver's picture

top table looks like they are flipping us the bird. 

Mon, 09/10/2012 - 23:49 | 2780749 jeff montanye
Mon, 09/10/2012 - 15:38 | 2779492 hannah
hannah's picture

the perfect way to prevent any kind of historical comparisons so everything is great going forward and we can only take ben's word for anything.

Mon, 09/10/2012 - 15:53 | 2779549 aerojet
aerojet's picture

Down the memory hole.

Mon, 09/10/2012 - 15:48 | 2779520 rsnoble
rsnoble's picture

Is it just me or does there seem to be an increase in the # of market making decisions lately? Yes the conspiracy hat is on high, just seems like every damn week lately the markets going nowhere and headlines state "we have to wait on such and such".

Mon, 09/10/2012 - 15:54 | 2779555 Cursive
Cursive's picture

Never trust any econometric data.  The folly of men.

Mon, 09/10/2012 - 16:01 | 2779596 Winston Churchill
Winston Churchill's picture

Truly.Having seen some astonishing fuck ups in my own field of engineering which

is at least hard scienced based, what on earth should we expect from this subjective

pseudo crystal ball gazing sociopaths ?

Mon, 09/10/2012 - 16:17 | 2779674 malikai
malikai's picture

We should expect precisely what we are seeing.

Mon, 09/10/2012 - 16:48 | 2779790 Balmyone
Balmyone's picture

Will the world ever go back to raw data, and let investors do their own seasonal adjustments.

All economic data now seems totally meaningless.

What are the seasonal adjustments? Has the methodology changed recently?

Bernanke with his smug smile needs to be adjusted. Maybe after QE4 he'll realize that adding liquidity doesn't mean anything when the world is overleveraged.

Mon, 09/10/2012 - 17:55 | 2779957 AgK9
AgK9's picture

Time to go long "nonsensicals".  Still short reality...

Mon, 09/10/2012 - 17:56 | 2779961 HungrySeagull
HungrySeagull's picture

I am sorry there are those are disappointed in the lack of charging to the credit card.

For morale boost, they need to get laid or look at the USA debt.

Mon, 09/10/2012 - 18:03 | 2779978 realtick
Mon, 09/10/2012 - 18:22 | 2780033 Snakeeyes
Snakeeyes's picture

The Fed has lots of reserves sloshing around, but mortgage debt and credit cards are contracting. A subprime auto and student loan recovery? YARGGHHH!!!!!!!!!11


Mon, 09/10/2012 - 19:45 | 2780259 Son of Loki
Son of Loki's picture

Watch consumer credit when the Internet Sales tax goes into effect this Fall.

How many people does Sears employ? JC Penny? ...all these companies holding on by a thread due to internet sales will meet some powerful headwinds, perhaps enough to put them 6 feet under.

Mon, 09/10/2012 - 20:13 | 2780323 Heyoka Bianco
Heyoka Bianco's picture

I can always tell a good data handjob by the density of the verbiage used to obscure the obvious: "We pulled it out of our asses and slapped it across your puny face." The Fed hands so many of these out, Berwanky looks like he's a cross country skier.

Mon, 09/10/2012 - 20:23 | 2780349 jonjon831983
jonjon831983's picture

Wait, he said from 2010 onwards data would need to be revised?  I was thinking at least only last month.

Tue, 09/11/2012 - 02:07 | 2780878 Zero Govt
Zero Govt's picture

"Frankly, ..nothing the Fed releases has any credibility, as the central planners are literally making up data..."

credit to the Wizard of Oz, bubble Ben, huffing and puffing behind the curtain to make his wonderous world (facade) look palitable

the vacuousness of office/authority is delusions of Granduer and perpetrating the myth they're in control and "All is going Well" not to enrich you, but to keep them clinging onto office a few more months/years

lying through your teeth as it's known in wider society

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