Tuesday, August 16, 2011

The problem remains

In a recent comment here, jim wrote:

Did you notice the consumer credit increased in June for the first time since before the crash?
It appears that we have for the first time since the meltdown a tiny uptick in TCMDO-GovDebt in Q1 2011

My thinking is that this is really what the debt ceiling Brouhaha was all about. There was a temporary slowing of federal money entering the economy from the beginning of the year up to Aug from the TSY belt tightening to stay under the ceiling. This caused some new demand for funds in the private sector (short term loans to get by wherever federal money spigot had been throttled)

I did notice an uptick. I don't remember where I saw it. But I know where to find it!

Graph #1: A Tiny Uptick

Graph #1 is FRED's default view of Consumer Credit Outstanding. Graph #2 is a close-up of the up-tick, shown as a percent change. What looks like an uptrend for the better part of a year is only a lessening of decline. It is only in the most recent quarter that the number goes positive.

Graph #2: Most of this is not positive, only less negative

Graph #3 shows percent change in total debt (blue), Federal debt (green). and Non-Federal debt (red). Bit of an uptick here in the private sector, too.

Graph #3: Change in Total debt and Components

Jim predicts "a new decline in private sector borrowing after Aug." I don't make predictions, but that wouldn't surprise me. Total debt remains high. Private debt remains high. The problem remains.

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