Courtesy of Mish’s Global Economic Trend Analysis
Consumer Credit Plunges Record $11.1 Billion
U.S. consumer borrowing fell more than expected in March, plunging a record $11.1 billion, a Federal Reserve report showed Thursday.
March consumer credit fell at an annual rate of 5.2% to a total of $2.55 trillion. This was the biggest percentage drop since December 1990.
Non-revolving credit, which includes closed-end loans for big-ticket items like cars, boats, college education and holidays, dropped $5.7 billion, or at a 4.2% rate, to $1.6 trillion.
Revolving credit, made up of credit and charge cards, fell $5.4 billion, or at a 6.8% rate, to $946 billion in March. This compared with a revised $9.7 billion drop in February.
Total Consumer Credit Outstanding
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There is no way those loans can be all paid back, so they won’t. Rising unemployment and falling asset prices seals the fate.
Total Consumer Credit Outstanding % Growth
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As a sign of consumer retrenchment, banks willingness to extend loans, and rising defaults, we are about to see the first contraction in consumer credit since the early 1990’s.
