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Revolving Consumer Credit Has Biggest Jump Since 2007, As Depository Institutions Turn On The Spigot

Tyler Durden's picture




 

Two items of note in this month's consumer credit statement. First: after dipping the most in April ($3.5 billion) since April of last year, revolving consumer credit soared by $8 billion in May, the most since November 2007, and just shy of half of the $17.1 billion in total consumer credit increase, solidly beating expectations of an $8.5 billion increase. Whether this one time spike will hold is unknown. What is known is that the US government continued to fund student and car loans to the tune of $6.2 billion, or roughly in line with historical Federal Government funding. Which, however, brings us to the second note. In May something quite curious happened: as the second chart shows, while the Federal government continues to be the primary source of lending, the biggest source of loans in May was actually Depository Institutions, which added $17.5 billion in May, a number only matched by the surge in December lending amounting to $21.3 billion. Back then, however, all of this lending was to fund holiday purchases which would soon be returned (we all remember the epic surge in December retail sales, only for everything to be unwound and then some in January and February). Which then begs the question: just what did consumers splurge on in May? Because it better have been more than just gas.

Total monthly consumer credit: revolving and non-revolving.

Sources of consumer credit.

 

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Mon, 07/09/2012 - 15:34 | 2599601 zero19451945
zero19451945's picture

Does it make sense to lend in this low interest rate environment?

Mon, 07/09/2012 - 15:39 | 2599635 NotApplicable
NotApplicable's picture

Only if you borrow it from the same people at even lower rates.

Mon, 07/09/2012 - 15:42 | 2599651 Dr. Engali
Dr. Engali's picture

Sure it makes sense. Get  money fresh off the printers for free and loan it anywhere from 6 to 30 percent. The problem is nobody has a job to pay it back.

Mon, 07/09/2012 - 15:56 | 2599722 Shizzmoney
Shizzmoney's picture

The problem is nobody has a job to pay it back.

Well, the TPTF and huge corporations don't consider this a problem. 

When you are drowning in Shit Creek, you'll take a paddle from anywhere. 

Even if that paddle was meant to be put in your asshole.

Mon, 07/09/2012 - 16:29 | 2599836 TruthInSunshine
TruthInSunshine's picture

There are those who  Swipe Their EBT b/c It's "Free", and then there is that increasing portion of the population living on the minimum monthly payments credit card or payday/title loan-cash advance model of sustenance.

Amerika. Swipe Yo Plastic, grab that Western Union loan, pledge the title to your Chevy Celebrity for a $373.22 payout...or Swipe Yo EBT, bitchez.

Mon, 07/09/2012 - 21:25 | 2600749 The Monkey
The Monkey's picture

Looks like the top of a sine wave.

Mon, 07/09/2012 - 15:43 | 2599657 purplefrog
purplefrog's picture

Low interest rate for whom?  or was this sarc/?

Mon, 07/09/2012 - 22:30 | 2600914 hyper-critical
hyper-critical's picture

Asset backed security issuance. They're good collateral again, remember?

Mon, 07/09/2012 - 15:35 | 2599609 financial apoca...
financial apocalyptic contagion's picture

we are so fucked

Mon, 07/09/2012 - 15:35 | 2599614 Dr. Richard Head
Dr. Richard Head's picture

Did the iPhone 5s come out and no one told me?

Mon, 07/09/2012 - 15:56 | 2599717 Not Too Important
Not Too Important's picture

Samsung is eating Apple on smart phone sales. Their Galaxy S III is the new top dog, and is going to stay there for long enough to kill iPhone sales. Is Bass shorting Apple, too? Without Sack's replacement, Apple is finished.

OTOH, he'll make so much money on shorting Japan, he'll only be working for fun.

Mon, 07/09/2012 - 15:36 | 2599621 Cursive
Cursive's picture

 

 just what did consumers splurge on in May? 

I'm guessing the 99'ers who recently dropped are now trying to make ends meet and the rest of us are charging our summer vacation plans.

Mon, 07/09/2012 - 15:37 | 2599624 midgetrannyporn
midgetrannyporn's picture

Exactly.

Mon, 07/09/2012 - 15:38 | 2599631 Dr. Richard Head
Dr. Richard Head's picture

I am not so sure about.  Cat food is pretty cheap these days and it doesn't taste half bad either.

Mon, 07/09/2012 - 15:47 | 2599675 Alpo for Granny
Alpo for Granny's picture

Yeah but take it from me..dog food is tastier.

Mon, 07/09/2012 - 15:49 | 2599681 Dr. Richard Head
Dr. Richard Head's picture

Stop flipping me off granny.  America is two cats and a dog away from revolution.

Mon, 07/09/2012 - 15:58 | 2599729 Not Too Important
Not Too Important's picture

With a little kimchee, it's all tasty, Dick. Had it myself, tastes like monkey.

Mon, 07/09/2012 - 16:38 | 2599886 catacl1sm
catacl1sm's picture

Just about a year ago, a can of cat food was $.46. Now, on sale, it's $.50. Not on sale, it's $.55. But there is no inflation.

Mon, 07/09/2012 - 17:32 | 2600062 Havana White
Havana White's picture

Still expensive, though.

Mon, 07/09/2012 - 20:44 | 2600653 Bohm Squad
Bohm Squad's picture

A burlap bag, rock, and string cost $1.50 ---> Therefore there's a three day payback period and then back into the black...!

Just sayin'.

Mon, 07/09/2012 - 17:28 | 2600039 Savyindallas
Savyindallas's picture

It won't be cheap for long. It will soon be people food and the price will go up. People will soon be eating cats though, so if you love your cat, keep a close eye on him /her--same goes for your dog. Tired of pesky squirrels? or possums getting into your garbage - they'll soon be on the run  -running for their lives. If you are growing food in your back yard garden, you's best surround it with an electrified fence. In fact, it could get so bad, that someday banksters might start tasting good. One fattened bankster could feed your whole block in a block party. May sound bad -but there are also benefits to such neighborhood gatherings. Gerald Celente says the next depression will result in all of us getting back to community and getting to know our neigbors better. Just make sure you check all the banksters pockets before you put him on the grill. A lot of these cretins are known to hide their gold/diamonds, etc. in some really disgustng places. Sounds bad, but one half ounce gold coin retrieved from a good pre-barbecue cleaning can pay for all the trimmings, side dishes and desert.

Tue, 07/10/2012 - 00:09 | 2601118 andrewp111
andrewp111's picture

I don't know about that. The inflation rate for Friskies and Little Can is pretty darn high.

Mon, 07/09/2012 - 15:50 | 2599692 Chupacabra-322
Chupacabra-322's picture

@ Cursive,

" just what did consumers splurge on in May?"

Answer:  Guns, guns and more guns.  Ammo, ammo, ammo and more ammo.

Mon, 07/09/2012 - 15:52 | 2599702 CvlDobd
CvlDobd's picture

I have one credit card with no debt outstanding. I just used it to pay a lawyer a $3,000 initial retainer for arbitration. The card is issued by Wells Fargo. Guess who I am filing against? Guess what I am going to do if I lose?

DOWN WITH THE BANKSTERS!

Mon, 07/09/2012 - 15:58 | 2599727 Tijuana Donkey Show
Tijuana Donkey Show's picture

I believe that is called bank to mouth, only performed by slutty, drunk banks.........

Mon, 07/09/2012 - 16:18 | 2599812 CvlDobd
CvlDobd's picture

I already started an LLC for my video company that will be specializing in bank to mouth pov videos.

Look for our first title "Two Bankers, One CO2 Tank" in adult stores near you.

Mon, 07/09/2012 - 15:38 | 2599628 Rainman
Rainman's picture

401-k gotta be getting tapped dry 

Mon, 07/09/2012 - 15:38 | 2599630 Freewheelin Franklin
Freewheelin Franklin's picture

Has it been 7 years, already?

Mon, 07/09/2012 - 15:38 | 2599632 chdwlch1
chdwlch1's picture

Consumers "splurged" on rent, food, and utilities...those who didn't qualify for unemployment or SSI that is.

Mon, 07/09/2012 - 15:38 | 2599633 Boilermaker
Boilermaker's picture

Must explain why REITs are breaking 52 week highs...again....and again.

The only financial instrument to never ever go down.  Ever.

Mon, 07/09/2012 - 15:47 | 2599672 Ineverslice
Ineverslice's picture

Don't remind me.  This is Bernank's last stronghold...these MUST hold. 

Frickn' ridiculator, waitin' for this to bust.

Mon, 07/09/2012 - 15:49 | 2599683 Boilermaker
Boilermaker's picture

The fate of the entire world depends on the price per square foot of empty office space and boarded up strip malls.  The entire system collapses if the equity valuations don't stay at or above 60X earnings.

I would have never figured.

Mon, 07/09/2012 - 15:53 | 2599703 Ineverslice
Ineverslice's picture

CMBS,

roger that.

Mon, 07/09/2012 - 15:41 | 2599644 distopiandreamboy
distopiandreamboy's picture

Tyler,  they spent it all on air conditioners and fans:

http://www.ncdc.noaa.gov/sotc/service/national/Nationaltrank/201205-2012...

Mon, 07/09/2012 - 15:41 | 2599645 youngman
youngman's picture

It wasn´t Gold and Silver bitches.....

Mon, 07/09/2012 - 15:41 | 2599647 Trying to Understand
Trying to Understand's picture

...or pay taxes??

Mon, 07/09/2012 - 18:00 | 2600147 Trying to Understand
Trying to Understand's picture

... sorry I didn't make clear... the individual households... not the businesses/firms.

Mon, 07/09/2012 - 15:44 | 2599662 g speed
g speed's picture

99 weeks of UE checks ran out-- the muppets have turned rabid on the banks

Mon, 07/09/2012 - 15:44 | 2599663 Jim in MN
Jim in MN's picture

Deck chairs.  For rearranging.

Mon, 07/09/2012 - 15:45 | 2599665 CheapBastard
CheapBastard's picture

I thought EZ student loans are now over $1 Trillion (and soaring) and most of it is backed by the Gubbermint (de facto)(same as the mortgage industry Fannie and Freddie):

 

http://www.doctorhousingbubble.com/bubble-university-student-loan-accoun...

Mon, 07/09/2012 - 15:48 | 2599678 adr
adr's picture

something tells me somebody making the chart hit the wrong button, because it sure wasn't spent at retail.

Taking out high interest personal loans to pay back student loans?

Hell it's a good idea, take out $10k from a TBTF bank and use it to pay off half your student loan. Tell the TBTF bank your bankrupt and default on the loan. Get around that pesky student loan non forgiveness thing.

Mon, 07/09/2012 - 15:51 | 2599693 Boilermaker
Boilermaker's picture

Are you sure?

SPG is only trading at 50X earnings.  Malls are all the rage right now.

Mon, 07/09/2012 - 15:51 | 2599695 Shizzmoney
Shizzmoney's picture

Which then begs the question: just what did consumers splurge on in May? Because it better have been more than just gas.

The World Series Of Poker was coming up in June/July.  Vacations time is pretty big for credit card usage.

Either that, or it was a bunch of people who came off the UE rolls and needed their own version of QE to help pay for the food, gas, and rent (which are all going up).

Mon, 07/09/2012 - 18:06 | 2600172 Bobportlandor
Bobportlandor's picture

Could be the savings rate is tanking and people look to the next thing to hang on to.

US Personal Saving as a % of Disposable Personal 3.9% down from 5.8%
Mon, 07/09/2012 - 15:52 | 2599699 laomei
laomei's picture

The market pretends to improve, people pretend to spend money.

Mon, 07/09/2012 - 16:25 | 2599828 Shizzmoney
Shizzmoney's picture

I pretend I am on a yacht everytime I take the bus to work every morning.

The only difference between me and Mitt is the fact that instead of serving me drinks like on Mitt's yacht, the Mexicans on my bus are actually drinking them.

Mon, 07/09/2012 - 18:08 | 2600184 Bobportlandor
Bobportlandor's picture

Should have used Limo comparison.

Mon, 07/09/2012 - 15:55 | 2599709 onebir
onebir's picture

"First: after dipping the most in April ($3.5 billion) since April of last year, revolving consumer credit soared by $8 billion in May"
I doubt banks are really changing their lending policies on a dime like this. Or households their borrowings. Looks like a timing effect/working day adjustment problems in the data.

Mon, 07/09/2012 - 20:02 | 2600532 juslen
juslen's picture

Don't be too sure. Credit card companies are getting desperate. I just got approved for a credit card with a 2,200 dollar limit, 0% interest for 15 months. My girlfriend went straight to their website and applied, she got 0% interst for 12 months. Go shopping anywhere and you will find all sorts of "deals" that require you to sign up for some type of credit card. A week ago I went shopping for clothes, I signed up for a store credit card and they took 40 dollars off my total price and I ended up paying only 110 dollars. That was after I saved 20% on the store sale as well. Over a year ago I got approved for a 7k dollar line of credit, 0% interest for 1 year. Don't worry, I'm paying off these credit cards in full without paying a single dime in interest. I'm saving this current card for emergencies, I have a 15 month interest free loan just waiting if I need it. Well.. the loan deminishes every month of course. If I'm taking advantage of these deals while having a substantial amount of my savings in real money, just imagine how other people are using these easy money/credit offers. When the shit hits the fan I will be prepared, the rest of these poor bastards are just going to default and the entire banking system will have to be bailed out again. The ship is sinking and the people are too distracted by the nice weather to notice.

Mon, 07/09/2012 - 15:59 | 2599728 ptoemmes
ptoemmes's picture

I gotta say that down here in SouthEast Florida, the summer cruise season (Ft. Lauderdale and Miami) is looking pretty good - better than last year anyway which was better than the year before.  Not liek i used to be pre 2008/2009.  Anecdotal reference that the planes these cruisers come in on - and leave on - are pretty full.  Of course the airlines have cut down on flights a bit. I can't afford to go cruisin'...

Mon, 07/09/2012 - 15:59 | 2599736 CrimsonAvenger
CrimsonAvenger's picture

They spent it all on vaseline. They know what's coming.

Mon, 07/09/2012 - 16:03 | 2599751 Fifth
Fifth's picture

It's a net number.  It's not that people are buying more, it's that they are less able to pay down what they already owe.

Mon, 07/09/2012 - 16:19 | 2599818 Snakeeyes
Snakeeyes's picture

Will this turn money velocities upwards? And inflation? Is it enough to offset the lack of mortgge lending?

http://confoundedinterest.wordpress.com

Mon, 07/09/2012 - 16:20 | 2599820 Poetic injustice
Poetic injustice's picture

Women are spending on increasing lip and butt size, men on penis extension.

Mon, 07/09/2012 - 16:27 | 2599845 Balmyone
Balmyone's picture

Wouldn't it be great if everyone in the U.S. used their credit card to buy gold and silver.

I just talked to a cars salesman, and he said he just had his worst month ever. Not a statistical sample to be sure, but maybe others could share any insight they have on U.S. car sales. As Zerohedge points out, there's quite a bit of channel stuffing inflating new car sales.

 

Mon, 07/09/2012 - 16:37 | 2599883 walküre
walküre's picture

Did you tell him that his "worst month ever" might be the "best month" looking 2 years down the road ...

Demand, demand where are you? Where, oh where are the buyers?

Government boosted sales of cars and trucks since 2009 has come to an end.

Mon, 07/09/2012 - 17:00 | 2599938 CheapBastard
CheapBastard's picture

3 more "For Sale" signs went up down the way....one a "pre-foreclosure" and the other $42/sf....each of those folks has 5 kids so i bet they need lots of work considering the lawn never gets mowed and their fences are falling over....shame....glad to hear the economy is "turning around" and "the private sector is doing ok" from what I read....just don't see it yet.

Mon, 07/09/2012 - 17:48 | 2600053 DosZap
DosZap's picture

I just talked to a cars salesman, and he said he just had his worst month ever. Not a statistical sample to be sure, but maybe others could share any insight they have on U.S. car sales. As Zerohedge points out, there's quite a bit of channel stuffing inflating new car sales.

Depends where you live.

Car sales in the US overall are up substantially, new home sales in DFW are up 22%,last mo over previous year.

Construction is going on all over.

Also Rick Perry just told Obamacare to stuff it.Texas will not be a party to the reach around the Const says Perry.

Eight other states have also opted out.

SO FAR

OT, as an aside,IF Owhammy Signs UN 21 Treaty and the Senate ratifies it(they will be dead meat if they do if they have another election), then get ready for a secession run, and an all out bloodbath.NO way Texans and many others will allow their semi autos to be seized..............bank it.

This would be the ultimate TEOTHWAWKI scenario...and JUST the Emergency Owhammy needs to call out the goon squads.

 

Mon, 07/09/2012 - 18:11 | 2600194 Abitdodgie
Abitdodgie's picture

I was in Toyota Fargo in May one of the sales guy said they had had there best month ever in March and sale were not slowing down

Mon, 07/09/2012 - 16:38 | 2599884 TideFighter
TideFighter's picture

It is odd that indiscriminate charging while plotting a default is getting cheaper.

Better act now, before cheap is obsolete.

 

Mon, 07/09/2012 - 17:15 | 2599992 SqueekyFromm
SqueekyFromm's picture

Well, one  of my best friends lost her job a while back in another state, sooo here is what she did. Over the six months she got unemployment, she ran up all her credit cards for cash advances, bought some food staples and some funsy stuff with the rest of the available balances. Then, she ditched her cell phone and moved in with her mom here in this state but first had her mail from the old address forwarded to a P O Box in the old state, which a friend checks for her every so often.  She pays her car insurance in cash, and got a new cell phone which only her very close friends have.

She plans on living "off grid" for a while, then file for bankruptcy a couple of years from now.  Maybe she is part of that credit run-up??? I bet a lot of people do stuff like this.

Squeeky Fromm, Girl Reporter

Mon, 07/09/2012 - 17:19 | 2600006 q99x2
q99x2's picture

Someone's paying the utility bills with the credit card.

Mon, 07/09/2012 - 17:54 | 2600121 Snakeeyes
Snakeeyes's picture

Obama's vision: food stamps, disability, part-time employment, credit card debt, no mortgage. = NO VELOCITY AND NO GROWTH.

http://confoundedinterest.wordpress.com/2012/07/09/consumer-credit-rises-but-is-it-enough-to-spur-growth-velocities-and-labor-market-still-lousy/

Mon, 07/09/2012 - 17:58 | 2600135 Rentenmark
Rentenmark's picture

Can I pay my mortgage with a credit card?  Get me those airline miles so I can relax on a beach while everything falls apart!

Mon, 07/09/2012 - 20:32 | 2600615 HD
HD's picture

This more than anything this will tell the tale. If Americans run out and max out their new cards on "stuff" it holds the bubble together another few months. If consumers use the credit to pay bills or as an emergency fund - that fat lady will have finally starting singing.

Mon, 07/09/2012 - 20:42 | 2600647 john_connor
john_connor's picture

0% same as cash for home improvement projects

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