Great news. Consumer credit SURGED in January. We blasted through the $2.5 trillion level. Car loans and student loan skyrocketed by almost $21 billion in just one month. Remember how I was wondering about all the new cars in West Philly? Here’s the answer. Ally Bank (GMAC in disguise) is making car loans of $35,000 to people in West Philly that have an average annual income of $16,000 and live in low income housing so they can buy Ford Expeditions. Imagine how smart all those people studying in their underwear at the University of Phoenix will be in two years when they graduate. Every dime of these $1 trillion in student loans are being covered by you. Obama is handing it out from your stash. Sounds like a sustainable economic model.
|Consumer Credit Outstanding 1
|2007||2008||2009||2010||2011 r||Q4||Q1||Q2 r||Q3 r||Q4 r||Nov r||Dec r||Jan p|
|Total percent change (annual rate)2||5.8||1.6||-4.4||-1.7||3.6||2.5||2.2||3.6||1.4||6.9||9.8||7.9||8.6|
|Total amount (billions of dollars)||2522.5||2561.8||2450.1||2408.3||2494.5||2408.3||2421.5||2443.3||2451.9||2494.5||2478.2||2494.5||2512.3|
|Terms of Credit 4
Not seasonally adjusted. Percent except as noted.
|48-mo. new car||7.77||7.02||6.72||6.21||5.75||5.87||5.86||5.79||5.90||5.45||5.45||n.a.||n.a.|
|Credit card plans|
|Accounts assessed interest||14.68||13.57||14.31||14.26||13.09||13.67||13.44||13.06||13.08||12.78||12.78||n.a.||n.a.|
|Finance companies 5|
|Amount financed (dollars)||28,287||26,178||28,272||27,959||26,673||27,423||26,673||n.a.||n.a.||n.a.||n.a.||n.a.||n.a.|
Consumer credit surges again in January
By Greg Robb
WASHINGTON (MarketWatch) – U.S. consumers increased their debt in January by a seasonally adjusted $17.8 billion for a third month of sharp gains, the Federal Reserve reported Wednesday. Over the three most recently reported months, consumer debt has gained an average of $18.0 billion, compared with an average monthly gain of $5.3 billion from October 2010 until October 2011. The increase in January was larger than the roughly $10 billion gain expected by Wall Street economists. The increase was powered by non-revolving debt such as auto loans, personal loans and student loans-these three categories combined for a $20.7 billion jump in January, the biggest gain since November 2001. Credit card debt fell by $2.9 billion in the month, the first decline since August.
The credit card was essentially invented at the same time we went off the gold standard in the early 1970s. And look what has happened since. This will surely end well.