Consumer Deleveraging Continues
Courtesy of Karl Denninger at The Market Ticker
For those who say that the consumer has "de-levered" enough, and thus we will return to prosperity and borrowing, The Fed threw a big bucket of cold water on that:
Consumer credit decreased at an annual rate of 5-1/4 percent in the second quarter. Revolving credit decreased at an annual rate of 8-1/4 percent, and nonrevolving credit decreased at an annual rate of 3-1/2 percent. In June, consumer credit decreased at an annual rate of 5 percent.
Or if you prefer it in pictures, here it is:
Note that revolving credit is being defaulted and paid down (probably much of the former!) much faster than non-revolving. Here’s the breakdown:
So much for the argument that "The Consumer is fine" and will "return to spending like a drunken sailor."
Uh, what will he spend when he is paying down debt while income, as reported by personal earnings, continues to contract or be flat?
