Consumer Credit Update (2011 July)

It’s the fifth business day of the month, which means the Federal Reserve has updated its G.19 Release, its estimate of outstanding consumer credit. One problem the U.S. economy faces is that consumer credit is growing faster than the economy. While the G.19 Release doesn’t quantify how much nonrevolving debt is student debt, it is very likely that most increases in that category are attributable to student loans because of the near impossibility of discharging them in bankruptcy. Link here for my analysis of increasing nonrevolving debt relative to GDP.

First quarter 2011 numbers have been revised again.

2010 Q4 2011 Q1 r 2011 Q1 r
Total $2,407.3 bln 2.1% $2,421.9 bln 2.4% $2,421.4 bln 2.3%
Revolving $800.6 bln -3.1% $791.1 bln -4.8% $790.6 bln -5.0%
Nonrevolving $1,606.7 bln 4.7% $1,630.9 bln 6.0% $1,630.8 bln 6.0%

Here’s what we get in May.

2011 Q1 r 2011 April r 2011 May p
Total $2,421.4 bln 2.3% $2,427.1 bln 2.8 $2,432.2 bln 2.5%
Revolving $790.6 bln -5.0% $789.8 bln -1.3 $793.1 bln 5.1%
Nonrevolving $1,630.8 bln 6.0% $1,637.3 bln 4.8 $1,639.1 bln 1.3%

Superficially, it appears credit card debt is the story for May. Nonrevolving debt saw a net increase of $1.8 billion, but this conceals much.

As for holdings of nonrevolving debt, which differs from the top portion of the release because it is not seasonally adjusted, finance companies lost $3.3 billion but everyone else added a total of $7 billion. Of that increase, $5.5 billion (79%) belonged to the federal government.

April (revised) May (preliminary) Annualized Increase
Government $359.4 bln $364.9 bln 20.0%

It appears growth of government nonrevolving debt accelerated in May, for in April it was only 15.1%.

Contrast all this with the BLS’s Employment Situation release, which reported a net growth of 54,000 jobs in May 2011.The BLS issued the June release today as well, which saw only 22,000 nonfarm payroll jobs added.

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