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94% Of March Consumer Credit Was For Student And Car Loans
Zero Hedge ^ | 05/07/2014 | Tyler Durden

Posted on 05/07/2014 12:45:27 PM PDT by SeekAndFind

Another month, another confirmation that when it comes to the US consumer, it is all about student debt (and to a lesser extent, car loans). Moments ago the Fed reported that consumer credit number for March: at $17.5 billion, it not only blew out the expectation of a $15.5 billion increase (although when one adds last month's $3.5 billion downward revision to $13.0 billion the two month total actually missed), but was the highest monthly increase since February 2013. That's the good news.

 

The bad news was once again in the composition: of this $17.5 billion $16.4 billion was non-revolving debt, or about 94% of total. The "good", or revolving, credit card debt? Only $1.1 billion.

Further, recall that traditionally when measuring a consumer's confidence in the economy, and their ability to grow their income, the best proxy is a simple one - their credit card. Unfortunately, in the New Normal that is not the case, and as the chart below shows, revolving credit has barely budged from its post-Lehman lows and is still about 20% away from its previous all time high.

 

As for student debt? We'll just leave that one to the Fed to show:

 

 

So where does the consumer credit growth come from? Simple: mostly student and to a lesser extent car loans, aka non-revolving debt. The same student loans which Janet Yellen earlier today lamented are the main reason for the slowdown in household formation, and by implication, the reason why the housing recovery is failing to stick for the fifth year in a row, and despite $2.7 trillion in liquidity injections by the Fed.

 

Oh well, maybe next month things will be different and all that student debt which is crushing the willingness of young Americans to go out and spend on bulk purchases will be restored.

Finally, and perhaps most important, for all the talk about a surge in consumer bank loans, it bears highlighting that of all the consumer debt so far created in 2014, the Federal Government is by far the primary source at $36.8 billion. As for depository institutions, aka banks: negative $28.2 billion.

Some lending spree all right.



TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: carloans; consumercredit; debt; economy; studentloans; tuition

1 posted on 05/07/2014 12:45:27 PM PDT by SeekAndFind
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To: SeekAndFind

Fantastic... So people are borrowing money to pay for decreasing assets... This is how debt slavery begins and MANY never recover...


2 posted on 05/07/2014 12:51:15 PM PDT by bfh333 (William Wallace was right! ~~~ FRRRREEEEEEEEEEEDOM ~~~)
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To: SeekAndFind

You will note that the number and size of student loans have been increasing dramatically over the last several years. As evidenced by Mini-ha-ha Warren’s latest MSM interview, she is pushing for reduction of the minimal interest rates and increasing the availability of related scams for not repaying the loans with the end result of forgiving the loans and sticking it to the taxpayers.


3 posted on 05/07/2014 12:52:57 PM PDT by RetiredTexasVet (Surgeon General Warning: Use of Planned Parenthood is hazardous to unborn black fetuses.)
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To: SeekAndFind

This is very sobering............to anyone with half a brain. Which doesn’t include Yellen or any of the dim bulbs that listen to and believe what she says.


4 posted on 05/07/2014 12:53:07 PM PDT by ChildOfThe60s ((If you can remember the 60s.....you weren't really there)
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To: SeekAndFind

On the bright side, perhaps it means America is finally telling the credit card bloodsuckers to go take a hike.


5 posted on 05/07/2014 12:53:46 PM PDT by Buckeye McFrog
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To: RetiredTexasVet

oh....some REALLY destructive candidate is gonna get him or herself elected President by promising Student Loan Forgiveness. I’m sure of it.


6 posted on 05/07/2014 12:54:44 PM PDT by Buckeye McFrog
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To: SeekAndFind

Still driving my 13 year old beater. I only have a 4 mile commute so I see no reason to go into debt for a new car.


7 posted on 05/07/2014 12:58:12 PM PDT by Blood of Tyrants (Haven't you lost enough freedoms? Support an end to the WOD now.)
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To: SeekAndFind
Wow. That is mind boggling. People are literally selling themselves into indentured servitude - for the rest of their lives!

The liberal education establishment is getting mighty fat from this inter-generational wealth transfer.

My theory is that a combination of over leveraged families, coupled with a real drop in household income along with inflation, has left families who basically live paycheck to paycheck, forcing their children to borrow up to their eyeballs to afford to go to college.

That is, families really no longer have the financial means to send their kids to college so the kids borrow it all and then end up with a lifetime of heavy debt... in an Obama economy with no jobs.

What a complete disaster, which most of them voted for I might add.

8 posted on 05/07/2014 1:03:25 PM PDT by Obadiah (I like Krabby Patties.)
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To: SeekAndFind

Student loans have got to be the biggest scam going - is the new sub-prime mess waiting to bust.


9 posted on 05/07/2014 1:16:16 PM PDT by PGR88
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To: Buckeye McFrog
oh....some REALLY destructive candidate is gonna get him or herself elected President by promising Student Loan Forgiveness. I’m sure of it.

Just yesterday Elizabeth Warren brought a bill that would allow subsidized refinancing of student loans. You can see leftists (like at Slate) building support for it. This bill won't go anywhere, but again, its just an opening shot.

http://www.slate.com/blogs/moneybox/2014/05/06/elizabeth_warren_s_student_loan_bill_smart_flawed_obviously_doomed.html

10 posted on 05/07/2014 1:21:14 PM PDT by PGR88
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To: SeekAndFind

Aye carumba


11 posted on 05/07/2014 1:25:31 PM PDT by F15Eagle (1Jn4:15;5:4-5,11-13;Mt27:50-54;Mk15:33-34;Jn3:17-18,6:69,11:25,14:6,20:31;Ro10:8-11;1Tm2:5-6;Ti3:4-7)
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To: Obadiah
Wow. That is mind boggling. People are literally selling themselves into indentured servitude - for the rest of their lives!

In this horrible economy, what choices do people really have? I am going back for my MBA because (start next week) my BS was simply not enough.
12 posted on 05/07/2014 1:26:48 PM PDT by Red in Blue PA (When Injustice becomes Law, Resistance Becomes Duty.-Thomas Jefferson)
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To: SeekAndFind
The young really don't have much of a choice.

Where are the jobs?

Payroll taxes are at the highest they've every been. Too expensive to hire the inexperienced.

Anti-age discrimination laws bias hiring in favor of over-40 workers. Why hire a young worker when you might be sued by an older worker?

Those unemployed in their youth are going to become an entire generation that will be unemployable for the rest of their lives.

13 posted on 05/07/2014 1:27:29 PM PDT by freerepublicchat
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To: PGR88
The biggest scam is the new deal where you only pay interest for 10 yrs and then the loans are forgiven TAX FREE if you work for the government. "Big Education" wins again.
14 posted on 05/07/2014 1:28:57 PM PDT by nascarnation (Toxic Baraiaq Syndrome: hopefully infecting a Dem candidate near you)
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This may be of interest.


15 posted on 05/07/2014 1:29:02 PM PDT by Lurkina.n.Learnin
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To: freerepublicchat

Truth be told you’re right about that; there are no jobs and there is no way to live anywhere unless you’re an eternal student and live on campus.

As for a car, why a new car and not a used one?


16 posted on 05/07/2014 1:29:16 PM PDT by CorporateStepsister (I am NOT going to force a man to make my dreams come true)
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To: expat_panama

Ping


17 posted on 05/07/2014 1:31:06 PM PDT by Lurkina.n.Learnin
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To: Buckeye McFrog

Exactly. People have to buy cars after their old cars wear out. People do not have confidence that they will be able to pay for other consumer goods. As for the student loans, oh well, the young will learn the hard way.


18 posted on 05/07/2014 1:31:49 PM PDT by forgotten man
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To: Blood of Tyrants
Still driving my 13 year old beater. I only have a 4 mile commute so I see no reason to go into debt for a new car.

Mine's 15 YO. My commute's about 6 miles to the light rail station. I'm not putting any more money in it...period.

19 posted on 05/07/2014 1:32:42 PM PDT by Night Hides Not (For every Ted Cruz we send to DC, I can endure 2-3 "unviable" candidates that beat incumbents.)
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To: bfh333

Signing up for college in the fall for the student loans, wonder how many were paid off.


20 posted on 05/07/2014 1:34:02 PM PDT by edcoil (Not a single republican was ever a slave owner. They were all democrats.)
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To: SeekAndFind; All


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21 posted on 05/07/2014 1:38:40 PM PDT by musicman (Until I see the REAL Long Form Vault BC, he's just "PRES__ENT" Obama = Without "ID")
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To: Red in Blue PA
It is not necessarily a bad investment if you have a reasonably attainable path to future employment. If the potential reward is at minimum parallel with the financial risk, then it may be worth it. But, for far too many, college is just the well-worn path they follow simply because of peer pressure and social status pressure. For too many, they are blackjack against the house by taking nebulous courses that never lead to any employment advantage at a;;.
22 posted on 05/07/2014 1:40:35 PM PDT by Obadiah (I like Krabby Patties.)
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To: CorporateStepsister
Truth be told you’re right about that; there are no jobs and there is no way to live anywhere unless you’re an eternal student and live on campus.

As for a car, why a new car and not a used one?

Used cars are themselves so expensive now that many take out loans to buy them.


23 posted on 05/07/2014 1:42:59 PM PDT by freerepublicchat
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To: freerepublicchat

Does that chart indicate that prices are only 22% more than 1995 (14 yrs ago?)

Doesn’t seem that big an increase to me.


24 posted on 05/07/2014 1:49:10 PM PDT by nascarnation (Toxic Baraiaq Syndrome: hopefully infecting a Dem candidate near you)
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To: forgotten man
"People have to buy cars after their old cars wear out."

Intelligent Investing Panel
Going Great Guns
Forbes
David Serchuk, 04.23.09
"Sonders:...And almost by virtue of population growth and demographics and all those things, some of these factors just can’t mathematically continue at the pace that we have seen, you know, at a 9 million pace of auto sales. You’re looking at a requirement that every car on the road is going to have to last, you know, 25 to 30 years. So I think there are some bubbles that have formed, with Treasuries probably being top on the list..."
[...] "Forbes: I was in Colorado, and I knew people who had 200, 300 guns. And they'd stash them in various hidden places around their compound. This wasn't all that uncommon out west."
[...]
"Thomas:...But, you know, you could always find another job that would pay all right, and pay slightly above minimum wage, could allow you to at least live and have a home in most communities. And I think that's slowly changed."
[...]
"Sonders:...we have gone from a couple decades ago being a manufacturing economy to more of a service-oriented, information economy. That has just displaced permanently a lot of workers,..."


25 posted on 05/07/2014 2:03:22 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of corruption smelled around the planet.)
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To: Night Hides Not

>>Mine’s 15 YO. My commute’s about 6 miles to the light rail station. I’m not putting any more money in it...period. <<

Change your oil filter every six months!


26 posted on 05/07/2014 3:00:51 PM PDT by B4Ranch (Name your illness, do a Google & YouTube search with "hydrogen peroxide". Do it and be surprised.)
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To: Obadiah

Don’t forget the reason students are going into debt. They are opting for higher education because there are NO JOBS. They are hoping that in the 4 or so years they bide their time in class, the job outlook will improve over that period.
Boy, are they gonna be surprised. The ‘New Normal’ brought to you by Obama & Co is just what you see before you.


27 posted on 05/07/2014 3:34:43 PM PDT by griswold3 (I was born here in America. I will die here in a third world country. Obama succeeded.)
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To: Obadiah

“It is not necessarily a bad investment if you have a reasonably attainable path to future employment. If the potential reward is at minimum parallel with the financial risk, then it may be worth it.”

This doesn’t work; college costs remain high (to pay academia) while wages are being driven lower all the time. Anyone earning $40K or more (a number I just pulled out of the air) has forces working furiously behind the scenes to either send that work overseas of bring in foreigners to do it. Unless one is employed by the government, those wages required to pay off that debt will never materialize. Never mind paying normal living expenses with the McJobs available now; imagine having those loans on top of that?


28 posted on 05/07/2014 4:35:59 PM PDT by kearnyirish2 (Affirmative action is economic warfare against white males (and therefore white families).)
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To: griswold3

“The ‘New Normal’ brought to you by Obama & Co is just what you see before you.”

You’re right; if people don’t yet realize by now that “globalization” and the “information superhighway” were the death knells for our way of life, they’ll realize it soon enough. This isn’t a temporary malaise that will pass; the traditional “quick fixes” (war and government spending) have failed, and there is nowhere else to go. Unless Red China and India engage in a destructive nuclear war, this is our future...


29 posted on 05/07/2014 4:39:08 PM PDT by kearnyirish2 (Affirmative action is economic warfare against white males (and therefore white families).)
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To: kearnyirish2

Globalization, Technology and Demographics are the key to economic fundamentals.
We are victims of our own success.


30 posted on 05/07/2014 5:41:52 PM PDT by griswold3 (I was born here in America. I will die here in a third world country. Obama succeeded.)
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To: kearnyirish2

IMO, had the US government never got into the student loan guarantee (Like mortgages) we wouldn’t have a student loan bubble. As long as colleges know the government will guarantee every loan they’ll raise prices. Democrats will never go for it but student loans MUST go back to being privatized. When students have to go convince a banker for a loan for a certain field of study, they must be able to convince said loan officer that they are not a high risk and has a high probability to pay such loan back. Plus students MUST put up at the least 20% so that they too have skin in the game.
Sorry for the rant but that’s how I feel.


31 posted on 05/07/2014 6:31:29 PM PDT by Undecided 2012
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To: Undecided 2012

I agree with you. In the news recently there has been talk of how colleges are seeking foreign students since less Americans are going; 20 years ago when I was in school they sought those students because they paid out-of-state tuition (they were more lucrative than “native” students). For too long these schools were accountable to nobody and squandered money; now the money is gone.


32 posted on 05/08/2014 3:39:29 AM PDT by kearnyirish2 (Affirmative action is economic warfare against white males (and therefore white families).)
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To: kearnyirish2
I fear you may be correct. And that's my point. College may really not be a good value any longer. Why spend all those exorbitant resources in an attempt to obtain something may never be there?
33 posted on 05/08/2014 7:41:48 AM PDT by Obadiah (I like Krabby Patties.)
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To: Obadiah

“College may really not be a good value any longer. Why spend all those exorbitant resources in an attempt to obtain something may never be there?”

Young people are catching on (to the point that colleges ADMIT seeking foreign students - which they’d been doing for decades); I think our higher education will contract (unless “saved” by those foreign students). People I know describe how small some colleges were until those dodging the Vietnam War draft swelled the ranks of students; in my area some have scaled down since...


34 posted on 05/08/2014 2:03:39 PM PDT by kearnyirish2 (Affirmative action is economic warfare against white males (and therefore white families).)
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To: freerepublicchat

What a mess this country is in.


35 posted on 05/08/2014 10:49:31 PM PDT by CorporateStepsister (I am NOT going to force a man to make my dreams come true)
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