Credit Card Debt Hits All Time High As Consumers Unleash Historic Shopping Spree

It's official: the reason behind the recent rebound in the economy can be explained with two words: "charge it."

Readers may recall that one month ago, we reported that with Republicans in Washington on the verge of passing their first major piece of legislation in the form of comprehensive tax cuts that will allow Americans across the income spectrum to keep a little more of their hard earned cash in 2018, it appeared that U.S. consumers already "pre-spent" their savings using their credit cards. 

And now we have confirmation that this is precisely what happened, because in the month of November, between revolving, or credit card, and non-revolving debt, largely student and auto loans, according to the latest Fed data, total consumer debt rose by $28 billion, or the most since November 2001, to $3.827 trillion, an annualized increase of 8.8%, or roughly 4 times faster than the pace of overall GDP growth.

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Broken down, consumer credit rose by $11.2 billion in revolving credit, or credit card debt, which pushed it a record $1.023 trillion, the highest credit card amount outstanding on record. This was also the second highest monthly increase in credit card debt on record.

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Meanwhile, non-revolving credit - or auto and student loans - rose by $16.8 trillion to $2.805 trillion. Nonrevolving lending to consumers by the Federal government, which is mainly student loans, rose to $1.142t, on a non-seasonally adjusted basis.

This was to be expected: as we showed last month, US consumers appear to be tapping out, and as a result the Personal savings rate dropped to 2.9%, the lowest since November 2007.

So, in addition to all the usual holiday trinkets that US consumers buy year after year, what hot new Christmas gadget has Americans suddenly willing to max out their credit cards?  Well, if Google search trends are any clue, it might not be a gadget, or anything tangible for that matter, at all.

Comments

YUNOSELL T-NUTZ Jan 8, 2018 3:47 PM Permalink

Doh!! With the SALT deduction lowered many will actually end up paying more income taxes next year.

Hey if you're already in bankruptcy territory then why not keep charging things with credit -- at that point, you're only going to hurt the bankers. Oh Wait, they always get bailed out, so you're going to hurt the taxpayers ultimately.

OK nevermind.

In reply to by T-NUTZ

3-fingered_chemist YUNOSELL Jan 8, 2018 4:34 PM Permalink

SALT deduction is overblown at the individual level. The top rates were lowered so it balances out unless you are super-rich salaried person with a W-2 in a Blue State. The Blue States are whining that the SALT deduction is unfair to their residents when in fact they are only looking out for their State budget and nothing more. The Dems are just mad that they don't get to filter more of other people's money through their bloated bureaucracy via state income taxes that can then be spent and then reimbursed through the US Treasury to its residents. Now their waste is going to come under intense scrutiny and they aren't happy about that.

In reply to by YUNOSELL

vulcanraven T-NUTZ Jan 8, 2018 6:57 PM Permalink

Speaking of the search term "Buy Bitcoin with credit card", I posted this in a few other threads but I will say it again:

I heard through the grapevine that a guy I used to work for took a 100k Paypal loan to buy Bitcoin, his current girlfriend convinced him to go all in on BC as her current pyramid MLM business failed so they have both put everything they have into cryptocurrencies. I now know that their story is far from unique, lotta people gonna get rolled at some point.

In reply to by T-NUTZ

El Vaquero Jan 8, 2018 3:40 PM Permalink

Is it being securitized this time around?  Because if it is, I think I have a legal argument to fuck the banks when the inevitable defaults come.  

wmbz Jan 8, 2018 3:41 PM Permalink

Don't bet against the fed, and never ever discount the stupidity of great American consumer!

Born and bred to buy shit they don't need with money they don't have. Works every time! 

BritBob Jan 8, 2018 3:54 PM Permalink

And everybody (unless you're super rich) reaches for the credit card in December and then starts paying off the debt in the New Year. Hence the January sales when retailers try and squeeze the purse strings just a little bit more.

PontifexMaximus Jan 8, 2018 4:01 PM Permalink

Every day can be a new ath, the sky is the limit. Credit card debt = spending  on the other side, where is the problem? The masters of the CB’s will level it out and it becomes business as usual.

TrustbutVerify Jan 8, 2018 4:15 PM Permalink

Credit Card Debt Hits All Time High As Consumers Unleash Historic Shopping Spree

Wow, I also saw how our trade deficit had widened, too.  Imagine how much better the economy would be doing if Americans bought American made goods.

TheNeosNeo Jan 8, 2018 4:39 PM Permalink

Now this story my be true. I spent like a Jewish American Princess this Christmas. Only thing is, in a few days I'll pay it all off. I pay of my CC every month.

VZ58 Jan 8, 2018 4:39 PM Permalink

Well you can fool all the people pretty much all the time because basically most people are stupid. Yes this always ends well and of course this time it is all different! Like all the traders who think things are different this time...

tunetopper Jan 8, 2018 4:41 PM Permalink

under Obama every New year brought with it a higher Obamacare penalty, higher Insurance Premiums, the Tax Surcharge on higher incomes, and more socialism.  This past December brought with it a repeal of the individual mandate, lower top rate, higher standard deductions and stabilized insurance premiums.  That leads to consumer optimism, better animal spirits, and an incremental increase in the marginal propensity to consume. Keynes would say...ergo- rational expectations are at work.

JailBanksters Jan 8, 2018 5:00 PM Permalink

More people buying more crap they don't need with money they don't have using money that never existed to impress other people how rich they are. How can that not be good thing.

 

Ben A Drill Jan 8, 2018 5:56 PM Permalink

Food stamps for the lazy.  Food stamps for the baby’s, for stamps for the under the table worker, food stamps for employees at Walmart.

 

I want in on that free food too.