America's Credit-Card Fueled Spending Spree Hits A Brick Wall

Last month was bad, this month it's the worst it's been in almost five years.

Exactly one month ago we showed  that after the record debt-fueled spending spree in late 2017, US credit card usage in the first month of 2018 posted a sharp slowdown even as auto and student loan issuance maintained its feverish "drunken sailor" spending pace. Well, fast forward to today, when according to the latest NY Fed consumer credit report, the tapped out US consumer, whose personal savings rate recently hit an all time low, America's credit card-fueled spending binge just hit a brick wall as total consumer credit was one of the lowest in the past three years.

Of note, with only $148 million in additional credit card borrowings in the month of February, this was the weakest month in revolving credit growth going back almost five years, to November 2013, the last month in which credit card borrowing declined (with the exception of the December 2015 series revision).

Still, even with the nominal increase of just $0.1BN, total revolving credit rose to a new all time high of $1.031 trillion.

The silver lining was to be found in the non-revolving credit data set - used to pay for just two things, autos and "college" - which with the exception of one definition change month, has not gone down since 2011, also hit a new all time high of $2.836 trillion, following the latest monthly increase of $10.6 billion, which however was also a slowdown to recent trends, and the lowest since September 2016.

What about its components? With everything else going for record highs, if at a far slower rate, we doubt it will be a surprise to anyone that both student debt and auto loans hit a new all time high in the quarter ending December 2017, with $1.491 trillion for the former, and $1.12 trillion for the latter (the next monthly update will take place next month, when the Q1 data is released).

Credit and auto loan debt aside, the sharp slowdown, and borderline negative print, in credit card debt is the latest red flag for the US economy, which as a reminder ended 2017 with a record 13-week annualized surge in credit-funded spending.

And now that the hangover from the holiday spending spree is over, and credit card companies demand payment, US consumers - those whose personal saving rate is already near record lows - have not only retrenched, but have substantially slowed down their credit card usage, which for an economy in which 70% of GDP is consumer spending suggests more negative surprises for Q1 GDP.

Comments

TalkToLind Fri, 04/06/2018 - 15:36 Permalink

I got a letter this week.  It was from a CC company which threatened to LOWER my credit limit if I didn't start charging moar crap on their card which had a balance of $0.00.  I canceled the stupid card the same day.   

TrustbutVerify Fri, 04/06/2018 - 15:45 Permalink

From what I hear on CNBC more and more debt/credit is good and necessary for "the markets."  Forget the need/requirement to PAY BACK THAT DEBT.  That's all a consideration for the future.  Right?  If everyone involved - countries/sovereigns, corporations, individuals - don't continue to increase their debt then they are essentially anti-market.  And we all know we're WAY DOWN that debt road.

And now this decades long build to our, and the rest of the world's, precarious debt positions should be allowed to cripple us as a nation in trying FIX THINGS, making things better for us?  We're supposed to sit still watching our debt and trade problems ruin us?  

 

 

Sonny Brakes Fri, 04/06/2018 - 15:48 Permalink

Ladies and gentlemen, but mostly the ladies, this is your pilot speaking. Prepare for a crash landing and thank you for choosing to fly with the Federal Reserve, where we print money out of thin air.

ExPat2018 Fri, 04/06/2018 - 16:01 Permalink

I haven't had a credit card since I left the USA in 1989.  I do have a WorldPass Debit card from ABN-AMRO  which allows me to use it world wide spending MY OWN MONEY.   All the same benefits as a CREDIT CARD including warranty on purchases.

We have CURRENT accounts which is the term used world wide EXCEPT in the USA where you still call it a checking account.    LOL

Haven't seen checks here in 20 years.

 

ExPat2018 Seasmoke Fri, 04/06/2018 - 16:27 Permalink

Here is the trick to FREEDOM  but its a little late now.

You should have done this 15 years ago.

First get a second passport in another country (see SovereignMan website)

Then plan your escape funded by the banks.

Sign up and request every credit card you can.  Make small purchases and always pay on time for a year.  Then request a raise in limit.  Rinse and repeat for another year.  Then when you get a huge limit.  Max out all the cards for Cash and all the things you need to leave the USA and set up in your new country.  (including the one way airline ticket)

Do not leave a forwarding address and DEFAULT

There isn't a goddam thing the banks can do to you.

In reply to by Seasmoke

arrowrod Fri, 04/06/2018 - 16:25 Permalink

OK, I don't understand "credit card debt".  I pay for everything with a cash back credit card.  I pay the balance every month with autopay.  Am I a bad person?

ExPat2018 Fri, 04/06/2018 - 16:25 Permalink

Here is the trick to FREEDOM  but its a little late now.

You should have done this 15 years ago.

First get a second passport in another country (see SovereignMan website)

Then plan your escape funded by the banks.

Sign up and request every credit card you can.  Make small purchases and always pay on time for a year.  Then request a raise in limit.  Rinse and repeat for another year.  Then when you get a huge limit.  Max out all the cards for Cash and all the things you need to leave the USA and set up in your new country.  (including the one way airline ticket)

Do not leave a forwarding address and DEFAULT

There isn't a goddam thing the banks can do to you.

 

Sonny Brakes Rudog Fri, 04/06/2018 - 18:59 Permalink

What does sucking cock have to do with fraud? In an economy where your banker finances both you because you have a job and your boss because your boss is thinking of automating your job, I see nothing wrong with people doing their best to subvert the system. I wouldn't do it myself, but I encourage others to do it before you end up under the Queensboro bridge having to blow men for $15 dollars a man.

In reply to by Rudog

TalkToLind ExPat2018 Fri, 04/06/2018 - 16:36 Permalink

Having a second passport is absolutely one of the best things a free person can do.  But shhh...don't tell the goyims!

 

Edit:  Who did that...who voted -1?  Having a second passport is GOOD.  Even better is to also own a full Y-Fare ticket on EL Al Airlines so that you can jet to Tel Aviv!  That's how The Chosen People™ be rollin'.

In reply to by ExPat2018

Rudog TalkToLind Fri, 04/06/2018 - 17:07 Permalink

It was me.  Giving in to evil, just because everyone else has...and you're stupid if you don't...doesn't fly with me.  You lose your right to indignation once you sell out to evil.  I have been making my own way for 40 years without government or banking help.  Try building something useful, and stop being just another scam artist gaming the system.

In reply to by TalkToLind

TalkToLind Rudog Fri, 04/06/2018 - 17:22 Permalink

Hold on there, Hoss.  Don't you think it's evil that people are brainwashed to believe in make-believe lines on a map?  And they are taught that they are owned by another group of people (da gubermit) just because they reside on one side of the make-believe line vs. the other?  And that they risk death by crossing the make-believe line without asking permission?  Now that's some evil shit right there, don't you agree?

 

No, wait...if your job involves enforcing this nonsense, I already know your answer.   

In reply to by Rudog

Sonny Brakes Rudog Fri, 04/06/2018 - 19:07 Permalink

Tell us more about making your own way for 40 years without government or banking help. The last time I checked all currency comes from the government, it says so right on the bill.

People and you seem to be one of them, believe that just because they've managed to be successful that it gives them the moral upper ground. If you've been making it on your own for 40 years it's because of circumstances you were born into.

In reply to by Rudog

Muppet Fri, 04/06/2018 - 16:45 Permalink

Friend just learned their 88 year old father with dementia had run up around $20K in credit card debt and had signed up with a "credit repair" company whose taking fees from his checking every month.

Family agreed: cancel the cards, cancel the credit repair service. Stop paying all.  They may come for his home, but  now its a race between the banks and the grim reaper.