Posts
May 7 (Bloomberg) -- U.S. consumer borrowing jumped more than double the amount economists forecast in March, indicating a slowing economy is forcing Americans to accumulate credit-card and other forms of debt.
Is that what it indicates? Okay. Here are the scary charts in all their glory. As can be seen, March is absolutely horrific.
Wow, look at that huge spike up in March (adjusted for inflation). It makes that rise from 1992 to 2002 look so insignificant by comparison.
Once again, March is practically off the chart (adjusted for inflation and per person).
Allow me to zoom in a bit and wear my deeply sarcastic false warning hat. Holy cow! It is practically parabolic!! It looks just like a chart of oil!!!
Okay, I've had my fun. Wasn't the time to be concerned about the rise of this massive debt about a decade ago (when we were partying like it was 1999)? If anything, this chart continues to suggest to me that we are having a very hard time growing the consumer debt parabola in recent years. Maybe that's why tax rebate checks are on the way. Inflate or die. Right? Dang. I almost sound like a deflationist today. Almost.
See Also:
Trend Line Disclaimer
Source Data:
FRB: Consumer Credit
St. Louis Fed: CPI
St. Louis Fed: Population
2 comments:
Stag,
Great CPI chart. Beware of rocks not tomatoes. People can no longer afford to throw food.
CPI inflation is relative. Given our negative savings rate, I suspect many are living right on the edge. If expenses continue to rise faster than incomes then trouble looms. I just don't see over-priced housing and stocks saving the day for the majority.
CPI doesn't include debt burdens. Too many have too much debt. For some, it's their own fault. For others debt is the only alternative. Remember the Elizabeth Warren video? In any event, excessive debt has consequences for us all.
I still see inflation in necessities. If you're struggling to make ends meet the wants are far less important. What good is a fancy car when you can't afford the gas? What good are cheap home supplies or appliances if you can't afford your house? What good is free checking if you have no savings? Does that extra RAM make the computer less or more affordable?
Substitution effect - hamburger over steak, rent over ownership? Looks like we're subtituting a lower standard of living for a higher standard of living.
If we hadn't removed actual housing costs from CPI, it's very likely we never would have had the housing bubble.
I despise inflation. I take no comfort from theft, be it 2% or 10%. We're still searching for a way to get back to the 1950s economy - just listen to the presidential candidates. It ain't coming back with fiat & inflation.
MAB,
If we hadn't removed actual housing costs from CPI, it's very likely we never would have had the housing bubble.
I agree with the conclusion but not necessarily the premise. Housing costs weren't removed. They were postponed.
As housing prices are now falling faster than rents (if rents even do eventually fall), now we're being poned!!!
We are a nation of poners. We love postponing pain. Just look at our deficits (trade, budget, current account, savings, and so on).
We are truly in a box now and we've done it to ourselves.
Here's the funny part. Do you know what "poner" means in Spanish? I didn't until I wrote this reply. It means...
http://dictionary.reference.com/search?db=dictionary&q=poner
to put (something) into boxes
Poned I tell you! We've been poned!
Post a Comment