The Fed has many problems with its attempt to convince the world that it has itself fulfilled its recovery mission. That self-reflected “mandate” is meant to include a masterful revisit to prior American infatuation with debt and credit. There was no more visible and visceral demonstration of those terms than the middle 2000’s, and it is the intent of monetary [...]
Consumer credit is somewhat useful as a gauge for actual consumer behavior in actual activity, as opposed to consumer sentiment surveys which tend to follow stock prices (and be dominated by the upper incomes) and the theory on the “wealth effect.” In terms of the current “cycle”, or supercycle as it may be, sentiment and debt could not be further [...]
If you don’t have much by way of income growth, then there are other less desirable options for spending sources. There are “entitlements” or transfers and then there is debt. In the current age, the federal government has been responsible for originating and disbursing the vast majority of consumer credit in the form of student loans, in what is really [...]
For now, it seems as if the attempt to recreate 2005 is being born by revolving credit. There was, until the middle of last year, the holdover hope for the then-burgeoning mini-bubble in real estate, but events since the taper-driven bond selloff have conspired against that factor. While revolving credit might represent a restarted channel for monetary intrusiveness, the primary [...]
The end of deleveraging, or the end of the cycle? That is where pertinent attention needs to focus from April’s jump in revolving credit. For most of the “recovery” period, households eschewed credit cards. That changed in the snowy winters of early 2014, which either means deleveraging has finally run its course and a new debt cycle is beginning, or [...]
The primary argument in favor of “aggregate demand” policies, or at least attempts at demand-side “stimulus”, amounts to putting more money into the economy as spending. You hear it all the time, as in give money to people that do not have it now and they will spend it, thus creating a “pump priming” that stirs the economic engine as [...]
Despite robust reported auto sales, there is a growing disconnect between reported sales figures, inventories and production. The largest divergence actually exists between reported sales and actual production, but inventories fill in the rest of the story and link the two in reality. The monthly auto “sales” figures include “floor financing” or “warehouse financing” units, i.e., dealer inventory. Automakers count [...]
Stay In Touch