US Credit Card Debt Shrinks For Only Second Time Since 2013 As Student, Auto Loans Hit All Time High

One month after a near record surge in consumer credit driven by a spike in credit card debt, the US consumer went into mini hibernation to start the summer, when total consumer credit rose by just $10.2 billion, far below the $15 billion estimate, bringing the consumer credit - both revolving and non-revolving - total to $3.908 trillion.

And while non-revolving credit, i.e. student and auto loans, maintained its monthly ascent in line with the historical trend, growing by $10.4 trillion, the surprise was the unexpected shrinkage in revolving, or credit card debt, which declined by $185 million in June; this was only the second drop in US credit card debt since 2013, with March of 2018 the only other recent decline.

And while the shrinkage in credit card debt will prompt some questions about the resilience of the US consumer as the US economy entered the summer, the recent dramatic upward revision to personal savings notwithstanding, one place where there were no surprises, was in the total amount of student and auto loans: here we got the latest quarterly update for Q2 and, as expected, both numbers hit fresh all time highs, with a record $1.532 trillion in student loans outstanding, an increase of $8 billion in the quarter, auto debt also hit a new all time high of $1.131 trillion, an increase of $18 billion in the quarter.

Comments

ted41776 Yen Cross Tue, 08/07/2018 - 15:33 Permalink

must be those new loans that let you "buy a house" by bundling your student debt in with a mortgage that actually gives you money instead of requiring a down payment

then just foreclose on the house and let the banks eat your student loan debt. who says you can't get out of student loans? just have to get more creative with your finances

In reply to by Yen Cross

Let it Go BurningFuld Tue, 08/07/2018 - 20:38 Permalink

"I think your Billions and Trillions are a bit mixed up in the intro.'  Yes they were but it may soon be corrected, however, this always concerns me. 

I would like to suggest it is a sign the economy is no longer linked to reality is when those covering financial matters begin to mix up the amount of money they are reporting in news stories and nobody notices or cares. Today the confusion is between billions and trillions, years ago it was millions and billions. The article below attempts to show a visual example of the difference.

 http://Billions And Trillions Of Dollars Are Hard To Comprehend.html

In reply to by BurningFuld

Yen Cross CoCosAB Tue, 08/07/2018 - 16:30 Permalink

  Pull your head out. The number should be billions in several sentences.

 Consumer debt doesn't increase or decrease by trillions from print to print.

  There doesn't need to be a "thousands separator" when the increases are listed in trillions in the first place. I see where the author was going but he failed to list monthly increases by billions.

  Ding Dong!

In reply to by CoCosAB

Batman11 Tue, 08/07/2018 - 15:46 Permalink

The 1920s roared with debt based consumption and speculation until it all tipped over into the debt deflation of the Great Depression.

No one realised the problems that were building up in the economy as they used an economics that doesn’t look at private debt, neoclassical economics.

Let it Go Tue, 08/07/2018 - 20:28 Permalink

The massive debt load hanging above our heads has not receded or gone away it has merely been transferred to the public sector where those in charge of such things feel it is more benign. By a series of off-book and backdoor transactions those in charge have transferred the burden of loss from the banks onto the shoulders of the people, however, shifting the liability from one sector to another does not alleviate the problem.

Writing off bad debt is usually a painful process and often results in a huge change in what something is worth. The creditor, meaning the person, business, or institution that holds the paper can suffer a huge loss. Defaults generally constitute an unplanned and involuntary financial adjustment. We as individuals should be concerned as to how defaults can spill over and affect our lives. The article below delves into this subject.

 http://Debt Has Burgeoned, Is The Day Of Reckoning Near? html