The Fed reports dramatically weakening consumer credit with negative revisions too.
Consumer Credit Report Revisions
Revision Key Points
- Most of the revisions are in nonrevolving, but that impacts the totals.
- Nonrevolving credit rose $1 billion in July, from a negative $22 billion adjustment in June. The Fed revised a reported $3.735 trillion down to $3.713 trillion.
- In turn, nonrevolving impacted the totals.
- Total credit rose $11 billion in July, from a negative $23 billion adjustment in June. The Fed revised a reported $4.997 trillion in June down to $4.974 trillion.
Nonrevolving Consumer Credit in Billions of Dollars
Nonrevolving Credit Implications
Assuming the data is accurate (unlikely) or at least the revision direction is accurate (likely), mortgage and existing home sales data is suspect.
Real (inflation adjusted) nonrevolving credit peaked in June of 2021.
Consumer Credit in Billions of Dollars Since 1969
Consumers have generally done a pretty good job of avoiding credit card debt thanks to three rounds of fiscal stimulus.
However, inflation kicked in and the stimulus money has been spent. The result is the steep rise in credit card debt as noted by the blue arrow. Let’s hone in on that.
Revolving Consumer Credit in Billions of Dollars
Stunning Steepness in Credit Card Debt Accruals
The speed at which consumers are going into credit card debt is stunning.
It’s hard to maintain lifestyles with rising inflation unless wages keep up.
The BLS and Fed believe the rate of increase in inflation is falling. Assuming the data is correct, consumers are struggling anyway.
What Happens if Jobs Take a Dive?
That’s actually the wrong question. Job revisions (there’s that word again) have been steeply negative.
Jobs are still positive, assuming (there’s that word again) you believe the numbers and more negative revisions (there’s that word again) are not in the works.
As long as you are making assumptions, if you are rah-rah on the strength of the Biden economy, you may as well assume GDP numbers are correct as well.
My assumption is GDP is flat out wrong and Gross Domestic Income (GDI) numbers are far more likely to be correct than GDP numbers. GDP and GDI are supposed to be the same but aren’t.
GDP vs GDI
On August 30, I commented Negative Revision to 2nd Quarter GDP, Huge Discrepancy with GDI Continues
If you are a GDP and Jobs believer you likely assume (there’s that word again) GDP is accurate. The last three quarters are +2.6%, 2.0%, and 2.1%.
In contrast, the last three measures of GDI are -3.3%, -1.8%, and +0.5% with the more recent quarter the most likely to be the most revised.
The Fed Is Making Decisions on Poor, Untimely Data, Frequently Revised
I tied many of the ideas in this post together, in far more detail (absent the credit card revisions), in my previous post The Fed Is Making Decisions on Poor, Untimely Data, Frequently Revised
Please give it a look. Meanwhile, damn the revisions, full belief ahead.
Friends, Is this analysis of the Federal Reserve operation of interest ?
What a person has in their billfold is a FEDERAL RESERVE NOTE. That is written notice you have a claim against the FR system — that used to be identified as ‘redeemable in lawful money. The FR Board of Governors, Inc., is alleged to be — a closely held privately owned shareholder corporation. This has never been denied. A private debt was issued.
By legislation relying upon fraud, the Note is now identified as a ‘legal tender’, i.e., guaranteed by government. Can responsibility for the ‘Note’ be shifted by fraud ?
**********************************************************
My graduate professor teaching a course of Money and Banking informed the class that Deficit Spending Treasury securities [DS] were transferred from the U.S. Treasury to the Federal Reserve to begin the creation of Book-Entry credit for government to spend. This private Credit for the government to spend is made by fiat book-entry into a government account.
The research analysis pasted below traces the flow of funds from the FR disposition of the security received. Information from TreasuryDirect [TD] Institutional tabulations reveals that components of the DS securities are added to auctioned securities for redeeming maturing securities in the market. The auctions exceed $15 trillion annually. 31 CFR §§375.3 identifies the FRBNY has exclusive control for the handling of auction funds and any related action they wish to claim. The relevant accounts are client accounts [not operational accounts] and have never been audited. TD historically tabulated the separated DS components as ‘new cash.’ TD responded to email inquiries as to disposition of New Cash by saying they were usd to pay government bills.
The claim was bogus. Such a flow of funds [from market to government] would not result in inflation nor would it add to the National Debt. The funds from DS securities [which have totalled to $32 Trillion over 100 years] had to go to a private entity. The covert shareholders of the FR Board of Governors, Inc., or a closely held corporation of a similar name, is an assumed destination. The funds, as profit, legally belong to the government. The GAO has standing authority to audit any handling of such government money. The Bloomberg v. Fed case, 2nd Circuit CoA, 2010, identifies such records to be subject to FOIA.
Does this analysis have an obvious flaw that has escaped the writer?
The inflationary depression is just getting started and it’s here to stay!
In July 2008 CL (crude oil) reached 147. CL bounced from minus (-)40 to 130
in Mar 2022, up 170 dollars, got tired and lost its grip. It might test the high again, or drop to the 55/40 range, during a recession. In recession the Canadian oil co, above break even point, will bring strong US dollars home.
Biden will never send US troops to save Ukraine from defeat. Black troops dying in a war between two white nations, or two Asian nations are unacceptable. As long as the war mongers make millions, sucking out million white women and their children, the war might cont until the next election. The Biden administration can’t admit defeat.
A new financial crisis will stop this war.
Wrong.
“Black troops dying in a war between two white nations, or two Asian nations…”
is the very essence of Diversity, Inclusion, and Equity. A “fair” share.
It’s DIE, get it?
Most data attempts to describe what has happened. Doesn’t much matter what the source is. Its all a best guess and highly inaccurate. Best to accept the inaccuracy.
But inaccurate data is better than none at all. After all, millions of interested parties anticipate the data. They can’t wait for it to come out.
What I find odd is how many people seem to think the data is manipulated!
There is no point in manipulating data. Because a day later, everyone will forget about the last data point and focus on the next data point anyway.
What interests me are not the data itself, but the trends.
Watching the trends help to anticipate where we are going as opposed to where we have been.
What do the trends tell me? Slow economic growth, and a consumer that (at the lower end) will focus more on necessities. High end consumers are still spending big on travel and services. Also, more demand for energy, and lower inventories of oil.
Rig counts that have been dropping throughout the US for most of the year. Declining capex budgets for most oil and gas firms for almost a decade now. Companies that have continuously been paying down debt for 3 years now and are reaching low debt targets or NO debt at all. More and more companies that can buyback all their shares with just 3-5 years of free cash flow.
I want to be the guy who owns the last remaining share of some of these firms. (Note: I understand why that won’t actually happen. But I like the phrase.)
as long as israel, ukraine, the military industry C suites, the wall street C suites, are taken care of, “what difference does it make?” to quote Hillary Rodham. the peasants will put their fat happy rich world consumption lives on “plastic daddy”. amerikanos have been trained this way for a few generations. like baby seals begging to be clubbed.
Assume – there’s that word again…
That word is the crux of the matter, isn’t it now. Our Government has reduced itself to behaving like children. When asked “What’s the problem” They say “I didn’t do it” When asked “What’s the solution” They say “I don’t know”
When asked “How did this happen” They say “Beat’s me”
When one is given zero answers to the questions they seek, one must start to “Assume” as no other option presents itself. Our Government Love It like this! The more the Citizens assume, the more divided they become, as their assumptions are going to be quite different, depending on their given circumstances. There are no right or wrong answers in reality, as there just can’t be an answer to a question not being seriously asked or seriously answered.
“There are no answers, only choices.” ― Stanislav Lem
.
Larry Fink, State Street, Vanguard and Soros control $100T assets. Obama control
the media, the banks, army, CIA & FBI, DAs, police chiefs, mayors, Antifa & BLM…
the most important choke points. The climate change and LGBT are diversions.
Transferring power from the weak white hands, to black, is the main event.
Oh, and Obama controlled Biden. Biden bit Michelle hand, because Michelle Obama
is the brain.
Never happen.
There aren’t enough dark complexioned folks among the Chosen People.
AAPL 1W looks bad, but it flipped higher. MSFT 1W also flipped higher.
1) Fed Net = Fed Total Assets – RRP. // RRP is down by $1T from $2.5T to $1.5T.
Total Assets are down by $0.9T ==> Fed Net n/c.
2) Next week UAW strike. US gov might strike in Oct. The Fed might stay put waiting for data : higher unemployment and a gov spending cut.
3) SPX weekly is red. SPX 1W flipped lower. ES (S&P 500 E mini) didn’t flip.
4) SPX 1W lost its grip on a LT Lazer coming from : Oct 2011 to Feb 2016 lows, parallel from Nov 2014 high. SPX smaller Lazer : Mar 13 to May 22 lows. SPX lost its grip on both the smaller and the LT Lazers.
5) The Dow is in the middle of the LT Lazer : Oct 2011 to Feb 2016 lows. It might
popup to the top.
QT bs.
I hope the markets tank at least 10-15% in the next 30 days.
I sincerely hope the Freedom Caucus holds together and forces the government into a shutdown over the border. It’s time to hold Biden accountable. Shut everything down for as long as it takes, Freedom Caucus!
Toot Toot!
Thanks for reading comment, Zardoz!
I appreciate your agreement.
It means a lot to me.
Cheers!
Metrics often overshoot tops and undershoot bottoms. Maybe the best value of this data is not the specific monthly number, but calling a top based on the many lower revisions.
“The speed at which consumers are going into credit card debt is stunning.”
Go, Joe Consumer! Rack up as much dept as possible. Keep the bank loses coming! Keep inflation going higher for longer. Keep that FFR higher for longer, JPowell. Prove EVERYONE wrong! Love it!
There’s $7.6T in treasuries that are maturing in the next 12 months. That’s 29% of all public debt that has to be refinanced at higher rates. SWEET! We’re already at $970B in annualized interest expense. Can’t wait for the quarterly numbers through CY 2024. Tax receipts are dropping. The Fed paper loses are mounting. Gone are the $98B in monetized debt remittances to the treasury.
And the best part is the longer this house of cards holds off on the next recession, the worse it’s going to be. Can’t wait!
Recession = housing price + stock market correction = 2% core PCE Inflation
The goldilocks soft landing doesn’t get us anywhere near the Fed’s inflation target.
Oh, and for good measure. Despite my hyperbole at times, I sincerely hope that Adams is right:
Illegal immigration will destroy NYC.
We need a poster child for the downside to open borders. Hard lessons are hard to learn. Good luck residents of NYC!
Don’t forget the major strikes that are/will be curtailing Federal income streams.
The US consumer may be getting tapped out but that’s not the biggest problem. I have been researching S&P 500 companies exposure to China after their temper tantrum with Apple. It seems a lot of the S&P 500 is dependent on the China consumer way more than I expected. The dependency on China ranges from a low of 15% to a high of 75%. Both countries will find themselves in a precarious position if this tit-for-tat keeps escalating.
I got this data from using the AI bots out there rather than going and reading 500 10K or 10Q reports so take it with a grain of salt. It is troubling to me so much that I am repositioning some of my portfolio although I’m mostly in cash & T-Bills now anyway. I will be staying away from Apple too at least until it gets down to $120 or lower.
Sometimes you gotta cut loose some of the rail-cars on the money train to make sure it reaches its destination. Choo! Choo!
The AI is probably fairly close, but there’s a solid chance it’s hallucinating wildly. The more I learn about it, the more I don’t want it in cars.
BTW what is tat?
a revenge that is very similar to the wound inflicted on oneself.
As defined by Webster:
an equivalent given in return (as for an injury) : retaliation in kind
If you want evidence that de-globalization is real, note that Mexico has become the largest trading partner for the US (link below). I am actually surprised Mish didn’t have a post on this and I don’t think it’s temporary.
I think China is realizing that the good old days are gone and now it needs to focus inward hence booting Apple. I won’t be surprised if Tesla, Proctor & Gamble and others start getting kicked out of China in favor of local businesses.
https://retailwire.com/discussion/mexico-overtakes-china-to-become-the-no-1-us-trade-partner/
net zero is nonsense
Bad news is good news.
Yes, because we can QE to infinity!
There are infinite future generations to sell out.
In addition to the sell outs of past generations. It is always an ongoing story.
As an X Senior International banker, economist and retired senior financial consultant it does not matter how one describes the chairs and/or align them the ship is going down to the bottom. That is the way that Nature has always and will always work no matter what, if, how and when. Nature works in cycles, and she can be delayed, BUT NEVER denied. Ask the Dinosaurs. We have been sweeping the dirt underneath the rug and the rug has srunk.
The rug is a merkin now. The phrase needs to be updated to “Sweeping it under the merkin.”
The recording is stuck on repeat and the music may never stop until the machine itself wears out. Bummer.