Consumer Credit Down for 11th Consecutive Month
Consumer borrowing in the U.S. declined less than anticipated in December as Americans took out loans to buy cars.
The series of declines is the longest on record and indicates consumer spending, which accounts for about 70 percent of the economy, will be restrained with Americans reluctant to take on more debt until hiring picks up. A separate government report today showed the unemployment rate unexpectedly dropped to 9.7 percent last month.
“Consumers have been reducing their debts and are not borrowing to finance spending like they did before the recession,” said Gary Thayer, macro strategist at Wells Fargo Advisors LLC in St. Louis. “Banks are lending, but they are being more cautious and they are having to write off a lot more consumer loans.”
OK, and? What have we here? More revisions? Yay!
The Fed’s figures track credit card debt and non-revolving loans, such as those to buy autos. The December decrease in credit was the smallest since a gain in January 2009. The Fed initially reported that consumer credit plunged $17.5 billion in November. Revolving debt, such as credit cards, fell by $8.5 billion in December, according to the Fed’s statistics. Revolving credit has decreased 15 straight months, the longest series of declines since the Fed began keeping those records in 1968.
Non-revolving debt, including auto loans and mobile-home loans, rose by $6.8 billion as car sales increased during the month. The Fed’s report doesn’t cover borrowing secured by real estate.
Auto sales in the U.S. increased in December to a seasonally adjusted annual rate of 11.23 million, the strongest since 14.09 million in August, when Americans took advantage of government incentives. The pace slowed last month, to 10.8 million.
Stop for a second. Am I absolutely insane to question this math? I don't see new cars on the road. I know most of my friends are unemployed and have all but given up on finding a job. I know small business owners I talk to still don't have access to loans. So who the hell are these consumers and where the hell are these loans/vehicles/jobs coming from?
Perhaps it is just that I am stuck here in San Francisco where a studio apartment runs you $1500 and a nice dinner for two can easily set you back $200 and therefore I am not seeing the "big picture" - anyone from the grassy tundra of the Midwest care to weigh in on my perceptions? NY? LA? Chicago? Somehow I get the sneaking suspicion I am not nearly as insane as I appear at first glance.
Still not buying it. But you're welcome to go jerk off over the Fed's G.19 via the Board of Governors here.