While it is traditionally viewed as a B-grade indicator, the March consumer credit report from the Federal Reserve was an absolute shocked and confirmed what we have been saying for month: any excess savings accumulated by the US middle class are long gone, and in their place Americans have unleashed a credit-card fueled spending spree.
Here are the shocking numbers: in March, one month after the February print already came in more than double the $18 billion expected, consumer credit exploded to an absolutely blowout $52.435 billion, again more than double the expected $25 billion print, and the highest on record!
And while non-revolving credit (student and car loans) rose by a relatively pedestrian 21.1 billion (which was still the 6th highest on record)...
... the real stunner was revolving, or credit card debt, which more than doubled from the already elevated February print of $14.2 billion to a stunning $31.4 billion, the highest print on record... just in time for those credit card APR to starting moving higher, first slowly and then very fast.
While this unprecedented rush to buy everything on credit at a time when there were no notable Hallmark holidays should not come as much of a surprise, after all we have repeatedly shown that for the middle class any "excess savings" are now gone, long gone...
... the fact is that most economists - such as those at Goldman Sachs - had previously anticipated that continued spending of savings by consumers (who they fail to realize are now tapped out) is what will keep the US economy levitating in 2022. Unfortunately, as today's consumer credit numbers clearly demonstrate, any savings that US middle class households may have stored away courtesy of stimmies, are long gone.
The implications are profound: any model that projected that US spending will be fueled by "savings" can now be trashed. And since this is most of them, the consequences are dire as they confirm - once again - that the Fed is tapering, QTing and hiking right into a consumer-driven recession which was not visible until new precisely because of all the credit-card fueled spending, which according to Deutsche Bank will begin in late 2023 and which according to Morgan Stanley can start in as little as 5 months. Today's data suggests that Morgan Stanley is right.