Consumer Credit: Government Says Increasing – NOT

According to the Federal Reserve:

Consumer credit increased at an annual rate of 3-3/4 percent in February 2011. Nonrevolving credit increased at an annual rate of 7-3/4 percent, while revolving credit decreased at an annual rate of 4 percent.

Econintersect analysis of the unadjusted data says the Fed’s seasonal adjustment factors are likely lacking.  Overall consumer credit remains in a downtrend.

The red line in the above graph removes the government as one of the lending institutions.  Even comparing the blue line which is all credit – it still optically looks like credit is not increasing (although seasonally credit falls in February’s).

Comparing YoY change, consumer credit overall is contracting – however this contraction is trending smaller.  Government lending is growing at the rate of approximately $100 billion per year thanks to student loans according to OMB studies which account for most of this growth.

Last month, Econintersect pointed out that Professor Paul Krugman is arguing “if we want a society of broadly shared prosperity, education isn’t the answer” (analysis here).  The Federal Reserve’s headline uses seasonally adjusted data.  The majority of revolving credit is from credit cards, while non-revolving credit includes automobile loans and all other loans not included in revolving credit, such as loans for mobile homes, education, boats, trailers, or vacations.

Related Article

Snake Oil, Paul Krugman, Student Loans & Consumer Credit  by Steven Hansen

Share this Econintersect Article:
  • Print
  • Digg
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • LinkedIn
  • Wikio
  • email
  • RSS
This entry was posted in Consumer Credit and tagged , , , , , , . Bookmark the permalink.

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.