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The State of the American Debt Slaves, Q1 2018

By Feux Follets following x   2018 May 8, 3:18pm 257 views   6 comments   watch   sfw   quote     share    

Total consumer credit rose 5.1% in the first quarter, compared to a year earlier, or by $184 billion, to $3.824 trillion (not seasonally adjusted), according to the Federal Reserve. This includes credit-card debt, auto loans, and student loans, but not mortgage-related debt.

That 5.1% year-over-year increase isn’t setting any records – in 2011, year-over-year increases ran over 11%. But it does show that Americans are dealing with the economy and their joys and woes the American way: by piling on debt faster than the overall economy is growing.

The chart below shows the progression of consumer debt since 2006. In line with seasonal patterns for first quarters, consumer credit (not seasonally adjusted) edged down from Q4, as the spending binge of the holiday shopping season turned into hangover, an annual American ritual:

Auto loans and leases for new and used vehicles rose by 3.8% from a year ago, or by $41 billion, to $1.118 trillion. Loan balances are impacted by prices of vehicles, number of vehicles financed, the average loan-to-value ratio, duration of prior loans (when they’re paid off), and other factors. So this chart is not necessarily a reflection of how many new and used vehicles were sold.

Credit card debt and other revolving credit in Q1 rose 5% year-over-year (not seasonally adjusted) to $977 billion. But wait… Q4 credit card balances of $1.03 trillion had been an all-time record, finally beating the record of Q4 2008. And Q1 2018, at $977 billion, set a record for any first quarter, beating Q1 2008 by a smidgen ($973 billion). So Americans did their job piling on high-profit debt.

Student loans in Q1 jumped by 5.4% ($77.8 billion) year-over-year to $1.51 trillion. While a shocking increase, it was the slowest year-over-year percent increase going back to 2007, the beginning of the data series: In fact, between 2007 and Q3 2012, these year-over-year increases ranged from 11% to 15%!

But it’s not like more people are going to college. Higher-education enrollment had peaked in 2010 and declined at least through 2015, according to the last data available from the National Center for Education Statistics.

Full Article: https://wolfstreet.com/2018/05/08/consumer-credit-auto-revolving-student-loans-q1-2018/

#Debt #Credit #Economics #Slavery #MAGA
1   Strategist   ignore (1)   2018 May 8, 5:58pm   ↑ like (1)   ↓ dislike (0)   quote        

Feux Follets says
The State of the American Debt Slaves, Q1 2018

If debt is slavery, bankruptcy must be freedom.
2   Feux Follets   ignore (1)   2018 May 24, 6:47am   ↑ like (0)   ↓ dislike (0)   quote        

Where the Debt Slaves Are the Most Vulnerable

I’m shedding a different light on consumer debt.

This type of chart is trotted out constantly these days to show that American households are in fabulous shape when it comes to their ability to service their blistering record debts. The red line in the chart shows household debt-service payments (combined monthly payments on mortgages, credit cards, auto loans, and student loans) as a percent of disposable (after-tax) income.

Since 1980, the ratio has ranged from 9.9% to 13.2%. It hit that top in Q4 2007 just before it all came apart. Ten years later, it was at 10.3%. Hence the conclusion that households won’t have any trouble servicing their record debts.

In a moment, we’ll get to the trap in this conclusion.

For a different view of the burden of debt, let’s look at non-housing consumer debt, because this is where the music is playing right now. To eliminate for a moment the impact of interest rates, let’s look at the amount of debt – not the monthly payments – as percent of disposable income.

And suddenly, the risks emerge a little more clearly. At year-end 2017, the ratio of non-housing debt – revolving credit such as credit card balances, plus auto loans and student loans – to disposable income reached a new record of 26.3%, up from 23% at the end of 2010, and up from 24% in 2007, the peak before it all came apart during the Great Recession:

So the ratio of non-housing consumer debt to disposable income – the burden these consumers carry on the backs in relationship to their incomes – is higher than ever, and only historically low interest rates have kept it manageable.

But interest rates are now rising, and many of these consumer debts have variable rates.

This explains a phenomenon that is already appearing: How this toxic mix – rising interest rates and record high consumer debt in relationship to disposable income – has now started to bite the most vulnerable consumers once again. And for them, debt service is getting very difficult.

In Q1, the delinquency rate on credit card debt at banks other than the largest 100 – so at the 4,788 smaller banks – spiked to 5.9%, higher than at the peak during the Financial Crisis, and the credit-card charge-off rate spiked to 8%. These smaller banks marketed to the most vulnerable consumers that had been rejected by the biggest banks. And now, once again, subprime is calling.


Related and cited in the above: https://wolfstreet.com/2018/05/18/credit-card-delinquencies-spike-past-financial-crisis-peak-at-smaller-us-banks/
3   Sniper   ignore (11)   2018 May 24, 8:29am   ↑ like (0)   ↓ dislike (0)   quote        

Feux Follets says

Feux Follets says

Thank goodness Obama did such a fantastic job with the recovery and did an even better job reducing college costs those 8 years of his term.

Where would we be without his amazing leadership? (besides his doubling of the national debt)

Oh, wait.......
4   APOCALYPSEFUCKisShostikovitch   ignore (30)   2018 May 24, 10:20am   ↑ like (1)   ↓ dislike (0)   quote        

We're so FUCKED!

We're so FUCKED!



5   mell   ignore (1)   2018 May 24, 10:20am   ↑ like (0)   ↓ dislike (0)   quote        

APOCALYPSEFUCKisShostikovitch says
We're so FUCKED!

We're so FUCKED!




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