Consumer Credit Misses As Revolving Credit Has Biggest Contraction Since April 2011

Just like every other aspect of the global economy and capital markets, the sudden, rapid moves in every times series are becoming increasingly more pronounced: today's case in point - consumer credit. Instead of rising by the expected $10.25 billion in June, following the whopper of a May bounce when it grew by $17 billion, in June, credit rose by only $6.46 billion. On the surface this was not a big miss and was the 10th consecutive increase in a row, driven exclusively by non-revolving credit - i.e. student and GM subprime loans. However, looking below the surface shows that following May's biggest monthly surge in revolving credit since November 2007 (+$7.5 billion), consumers have again expressed a revulsion to credit, with revolving credit sliding by $3.7 billion: this was the biggest monthly contraction in revolving credit since April 2011, and before that since February 2009. Did Americans developed a sudden taste for credit funded consumption in May, only to puke it all up and then some in June? It sure appears that way based on recent retail sales numbers. The July retail sales number will simply confirm if the re-icing of US consumers has continued for another month.

Finally the reason why the overall credit number posted an expansion in June is simple. Of the $6.2 billion in NSA increase in consumer credit, $5.8 billion came from one source. Take a will guess which one (the hint is highlighted in the chart below).