So what’s here that tells us anything?
In July, total consumer credit decreased at an annual rate of 1-3/4 percent. Revolving credit decreased at an annual rate of 6-1/4 percent, and nonrevolving credit increased at an annual rate of 1/2 percent.
Nothing, to be blunt.
This report is better looked at in pictorial form…
Ok, so non-revolving credit is rattling around the zero line, and revolving continues to decrease, albeit at a (slightly) slower annualized rate. Whoopie.
Or put in “level” terms….
Again, whoopie.
Next time you hear people talking about “consumer deleveraging” you might politely ask them “where?”
Oh sure, when it comes to credit cards consumers have cut back exposure, and continue to. But in non-credit-card exposure – all the other places that matter, whether it be auto loans, HELOCs, mortgages – there has been very little deleveraging at all.
There was nothing worth really talking about in the report, and while it was “slightly better than expected”, the fact remains that consumers simply are not (likely because they cannot) expand their credit exposure further.
Yet this is the premise that Bernanke, Obama and the rest of them have run their entire economic program upon - consumers will come back and borrow more to spend more.
Well, no they won’t. For more than two years they have not and despite all the exhortations to “go out and shop”, it simply isn’t happening.
I remain amazed that the so-called “mainstream commentator and economists” simply refuse to see the forest for the trees. The leverage monster reached his maximum expansion, and until we let him contract to a reasonable size, there is no durable economic recovery in the offing.
