Consumer borrowing (CICRTOT) in the U.S. surged in November by the most in 10 years, showing households are optimistic enough to take on debt and banks are willing to lend.
Credit increased by $20.4 billion, the biggest jump since November 2001, to $2.48 trillion, Federal Reserve figures showed today in Washington. The advance was almost twice as big as the highest forecast of 31 economists surveyed by Bloomberg News.
That’s a pretty big move. Let’s look at the rate-of-change graphs:
So on a rate-of-change basis revolving is back to the zero line, while non-revolving remains moving “nicely.” Ex-student-loans the rate of change is improving, but still negative — barely.
How about on an outstanding basis?
Ah. Nice divergence there. Yes, there was an uptick in the revolving and non-revolving ex-fed-gov basis, but the big mover — again — is student loans. Their volume grew by 1.58% in one month, a compounded annualized rate of change of nearly 21% (!!) To put this in perspective the monthly change on all non-revolving credit was 0.89% on the month (11.2% annualized) while revolving credit increased at 0.71% monthly (8.8% annualized.)
In gross amount terms $5.6 billion went on spastic plastic in what looks like either Christmas shopping or (and it better not be this) desperate consumers charging their groceries.
The total non-revolving increased $14.8 billion but of that $6.5 billion was student loans — nearly a majority — continuing the financial rape of our youth. Our youth continue to be the “next bubble attempt” victims, larding up the debt upon their shoulders with obligations growing at roughly double the rate of all non-revolving debt and more than double that of credit card obligations.
If you’re a parent and a part of this you deserve to have the door slammed in your face and bolted by your now-adult kids when, not if, Medicare collapses, your job is lost, and you look to your progeny for a way to avoid living under a freeway overpass.
Incidentally, that day is coming sooner than you think.
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