94% Of April Consumer Credit Goes To Student And Car Loans

Remember when, many years ago, the inflection thesis was that once a pick up in consumer lending is seen for discretionary purchases (i.e., revolving credit) that would be the sign that normality is coming back. Explaining why some may have forgotten this is that for the past 4 years it never actually happened for two simple reasons: i) consumers are still very unsure about the centrally-planned economy and thus still deleveraging (and defaulting) on their existing debt obligations, and what little savings they have are the preferred source of purchasing power, and ii) banks still have to open up the lending spigots which they won't as they have better returns investing in the stock market rather than taking on NPL risk in exchange for a record low NIM. However, while revolving credit is still dead, non-revolving credit - funded by a very generous Uncle Sam - and whose proceeds go to car purchases and to pay tuition (and all associated other goods and services) has never been stronger.

Sure enough in the latest month of data, April, the Fed just disclosed that of the $11.1 billion in crease in total consumer credit, only 6% was in revolving credit. The balance, or $10.4 billion, was non-revolving, and thus was used to pay for that new Chevy Impala and/or "Keynesian Shamanomics 101 for Dummies." And of course, all was funded by the US government.

Revolving vs Non-revolving:

LTM consumer debt by Revolving vs Non-revolving:

And sources of credit:


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