Consumer credit rose 6.25 percent according to the Fed G.19 Consumer Credit Release for May.
Revolving credit increased at an annual rate of 3 percent, while nonrevolving credit increased at an annual rate of 7-1/4 percent.
The total rise in consumer credit is $18.6 billion. Non-revolving debt, a category that includes auto loans, student loans, boats, and vacations accounts for $16.2 billion of the total increase.
Student loans and motor vehicle loans typically represent the bulk of nonrevolving credit. Thanks to easy credit, subprime auto loans likely played a part, but there are no details to state specific amounts.
Revolving credit (credit cards) rose $2.4 billion.
Mike “Mish” Shedlock
Students borrow for rent. Six students per apartment can borrow whatever the landlord asks. Uncle Sugar’s free money drives up the price of college and rent.
Spot on Jack. I live in a three college town and one Hendrix college is a top 10 liberal arts colleges in the USA, Hendrix is the institution and privately run. Rent indeed is higher in our town then in adjacent communities. The first year in college here anyway you have to live in the dorms unless your a resident in the city and can prove it. A lot of parent assist with rent in the community if the student wants to leave the college dorm after the first year.
I expected credit to rise after all people are registering for the new semesters, the tax checks have arrived and these kids need vehicles. Nothing new here.
Bankers keep printing ridiculous education inflation, explaining the student loans. Bankers are also printing auto inflation, but the BLS pretends that autos are cheaper because they are “improved”. Ha ha. If autos were cheaper, people could still buy them, instead of just leasing them.
So, we are 18.6 billion dollars in debt? How the hell does anyone get out from under THAT?! (Rhetorical question; You don’t.) Absolute insanity that it ever gets to these absurdly high numbers. Also, when it has spun this far out of control, do they really have a grasp on actual numbers anymore?
This is so messed up, I’m teaching my young children early about hard lessons in “I Want vs. I Need, and How Ya Gonna Pay for It?” Every time grandparents throw money at my kids, I hoard as much as I can of it in their savings account. Educational costs are far beyond reasonable: I’ve been promoting Khan Academy everywhere (especially to those wanting help-tutoring) and telling my children that college is not the almighty answer these days. Both my husband and I, each of us, have two bachelors. Guess what he does? Not a clean office job, but he’s paid very well to get damned dirty at a power plant. Hours aren’t ideal, but we aren’t hungry and we don’t get down to $25 in the checking after paying bills anymore. He was only required to go for certification and nearly completed it when they changed the rules and told him he needed a degree (He turned a rather pretty shade of red-purple on that bit of news!). Still, he didn’t get what he needed at the traditional college, it was at Ivy Tech. My point is that my kids see beyond the illusion of “higher education” and will hopefully learn by our mistakes and not get stuck in that debt trap.
More and more people see the shell game for what it is: a broken down, sinking cruise ship. And we will be certain that the next in line to board it, bail for solid land.
Silvermitt, very good anecdote and analysis, however “hoarding as much as I can of it in their savings account” however disciplined invites two unwelcome consequences. One is the counter party risk that bank will not return their savings- which with each passing year becomes a higher risk/zero reward proposal. Second is what do the bankers do with that money? Under the fractional reserve landing system, they use it as reserve to print and risk more, thus further empowering them.
The first present my parents bought me 66 years ago was a piggy bank. It was a very wise, educational and empowering gift.
With a piggy bank your kids actually see the money grow with each disciplined choice, rather than just a fluctuating number on an account. It becomes personal and motivating.
That same phenomena presents itself to owners of physical precious metals. Once they see and feel it, they are motivated to acquire more.
And when that piggy bank is full, then what? Do you own a safe? Safety box? They put the hard cash away and count it from time to time, and in doing so the savings becomes tactile. Just the desires they forego to save. And it’s not in the hands of the bankers. A win win, old fashioned strategy.
Good luck