The corporate MSM continues to do their part. They reported STRONG growth in consumer credit in September. That is awesome. Strong is such a great word. It make me feel good, because we all know taking on more debt is always a good thing in America. Just one little problem when you actually look at the data.
Non-revolving credit jumped by $14.3 billion to an all-time record of $1.885 trillion. It was at $1.52 trillion in 2007, before the financial crisis. Revolving credit (also known as credit card debt) fell for the 2nd straight month and is now at the same level as the fourth quarter of last year. It is $158 billion below the level of 2007. With no income growth and declining credit card spending, can someone explain how retailers are going to increase sales?
Non-revolving credit is made up of two main pieces – student loan debt and auto loan debt. The STRONG growth in consumer credit was attributed to a $13.8 billion SURGE in student loan debt and a $500 million increase in auto loans. What do these two areas have in common? You guessed it – Obama is spreading the debt around. The Federal government is taking your tax dollars and doling it out to clueless University of Phoenix enrollees getting an online degree in African Studies or Lesbian Literature. His friends at Ally Financial are making sure everyone in West Philly gets their very own Cadillac Escalade. Credit scores be damned.
So this is your STRONG demand story in a nutshell. So it goes.