Seasonally adjusted, in June, consumer credit increased (AKA DEBT) at an annual rate of 4.3%. For the second quarter, consumer credit increased at an annual rate of 4%. Revolving credit (credit cards) increased at an annual rate of 7.1%
Consumer Credit Outstanding (Seasonally adjusted):
Wut mean?
- Total consumer credit increased at an annual rate of 4.3% in June 2023.
- For the second quarter, consumer credit increased at an annual rate of 4%.
- Revolving credit (credit cards) increased at an annual rate of 11.2%--DEBT is BALOONING WAY FASTER THAN 2%!
- Nonrevolving credit (mortgages, loans) increased 4% year-over-year.
Regarding the total outstanding consumer credit as of June 2023:
- The total outstanding consumer credit was $4,997.09438 billion (UP 5.7% from a year ago!). (All time high--for now)
- Revolving credit accounted for $1,262 billion of the total outstanding consumer credit. (just below all time high)
- Nonrevolving credit constituted $3,740.38 billion of the total outstanding consumer credit. (NEW ALL TIME HIGH, for now...)
Remember, From 1st quarter 2022 to 1st quarter 2023, total household debt has increased $1,205 billion to $17.05 trillion (+7.57%)--Mortgage balances ($864 billion), HELOC ($22 billion), Student loans ($14 billion), Auto loans ($93 billion), Credit Card debt ($145 billion), Other ($67 billion):
- Total household debt has risen by $148 billion, or 0.9 percent, to $17.05 trillion in the first quarter of 2023.
- Mortgage balances climbed by $121 billion and stood at $12.04 trillion at the end of March.
- Auto loans to $1.56 trillion.
- Student loans to $1.60 trillion.
- Credit Card debt $986 billion.
However, unlike the banks, there are no fancy programs designed to keep households afloat in this inflating economy--and boy are households starting to feel it, especially in the areas like services and housing (that are BIG components of CPI--and way more 'sticky' than goods).
To try and further drive home the shaky ground households are on, let's revisit the Fed's Economic Well-being US Household 2022.
- "fewer adults reported having money left over after paying their expenses. 54% of adults said that their budgets had been affected "a lot" by price increases."
- "51% of adults reported that they reduced their savings in response to higher prices."
- The share of adults who reported that they would cover a $400 emergency expense using cash or its equivalent was 63 percent.
It is the younger generations starting to see itself break into delinquency now:
Student Loan repayments restarting in October WILL lead to more defaults:
People are going to die because of this:
To meet the rising need for food and nutrition assistance during the pandemic in the United States, all states were approved to provide Emergency Allotments (EA) to households enrolled in the Supplemental Nutrition Assistance Program (SNAP). In this analysis, we use the Census Bureauโs Household Pulse Surveys and exploit staggered state-level variation in dissolution of the SNAP EA payments to study whether the end of EA is associated with food-related challenges and economic hardships. Our findings indicate that EA termination is followed by a decrease in the likelihood that adult survey respondents had sufficient food for consumption and an increase in the probability of experiencing difficulty in paying meeting with usual household expenses. These findings provide policy-relevant insights into the potential impact of the nationwide termination of the EA payments that came into effect in early 2023.
- Auto loans are above 3% delinquency for (30-39) and approaching 5% for (18-29)
- Credit Cards are above 6% delinquency for (30-39) and approaching 9% for (18-29)
- Student Loan delinquency is being artificially suppressed currently.
- When folks (18-29) and (30-39) have to pay Auto loans, Credit Card debt, and Student loans all at the same time, delinquencies across all 3 will jump bigly.
- People will DIE being priced out of their lives in favor of raising interest rates to fight inflation for a problem the Fed created to begin with.
It is not getting better:
Consumer Lending:
Banks tightened standards for credit card and other consumer loans; moderate tightening observed for auto loans.
Banks made stricter requirements for credit card loans: higher minimum credit scores, reduced credit limits, and stricter granting processes.
Auto loans saw increased rate spreads and more stringent credit score requirements.
For other consumer loans, terms tightened through increased rate spreads and stricter credit requirements.
Demand for credit card loans remained stable overall, but large banks saw a slight decrease in demand, while other banks noticed an increase.
Declined demand observed for auto loans and other consumer loans in the second quarter.
Credit application rates in the past year have dropped to 40.3%, the lowest since October 2020, with declines in auto loans and credit card limit requests.
- However, there was an increase in applications for credit cards, mortgages, and mortgage refinances.
The overall rejection rate for credit applications has risen to 21.8%, the highest since June 2018, with the most rejections among those with credit scores below 680.
- The rejection rate for auto loans hit a new high at 14.2%, up from 9.1% in February.
- Despite these trends, the proportion of respondents planning to apply for credit in the next year slightly increased to 26.4%.
- However, the average reported probability of loan application rejection increased sharply across all loan types, hitting new series highs for auto loans, mortgages, and credit card limit increase requests.
TLDRS:
- Total consumer credit increased at an annual rate of 4.3% in June 2023.
- For the second quarter, consumer credit increased at an annual rate of 4%.
- Revolving credit (credit cards) increased at an annual rate of 11.2%--DEBT is BALOONING WAY FASTER THAN 2%!
- Nonrevolving credit (mortgages, loans) increased 4% year-over-year.
Regarding the total outstanding consumer credit as of June 2023:
- The total outstanding consumer credit was $4,997.09438 billion (UP 5.7% from a year ago!). (All time high--for now)
- Revolving credit accounted for $1,262 billion of the total outstanding consumer credit. (just below all time high)
- Nonrevolving credit constituted $3,740.38 billion of the total outstanding consumer credit. (NEW ALL TIME HIGH, for now...)
- Reminder, while banks have the liquidity fairy, 'we' get the promise of 2 more rate hikes this year, Atlanta Fed President Raphael Bostic yet again enrichens himself inappropriately from his position.
- To fix one end of their mandate (price stability) from the inflation problem they created, the Fed will continue sacrificing employment (the other end of their mandate) to bolster price stability by continuing to raise interest rates--causing further stress to businesses and households.
- I believe inflation is the match that has been lit that will light the fuse of our rocket.
