Government Statistics….Liar Liar Pants On Fire!

Posted By on December 17, 2010

Liar Liar Pants On Fire!  The chart below is total consumer credit outstanding. Interestingly, when we looked at it, somehow it showed an uptick. That seemed odd and didn’t square with the credit card data.  Low and behold…… they (the government) now count student loans as consumer credit, whereas they did not in the past. Geez, so federally supported credit (ie. student-backed loans) accounted for all the increase last month a record $31.8 billion expansion. Actually, the unadjusted data shows a $700 million decline! Hmm……so over the past three months consumer credit outstanding net of federal student assisted loans actually has collapsed $76 billion ….. this degree of contraction is without precedent.”

David Rosenberg, who looked a little deeper into the data says that they now count student loans as consumer credit, whereas they did not in the past. This from David:

“Is The Credit Contraction Over?

“What do you know? Outstanding U.S. consumer credit expanded $3.3 billion in October after eking out a $1.3 billion increase in September. This is the first back-to back gain since just before Hank Paulson took out his bazooka in the summer of 2008.

“Does this mean the credit contraction is over?  No.

“First, the raw not seasonally adjusted data shows a $700 million decline. Once again, it was federally supported credit (ie. student-backed loans) that accounted for all the increase last month a record $31.8 billion expansion. Commercial banks, securitized pools and finance companies posted huge declines to the point where excluding federal loans, consumer credit plunged $32.5 billion, to the lowest level since November 2004 (not to mention down a record 9% YoY). Over the past three months consumer credit outstanding net of federal student assisted loans has collapsed $76 billion … this degree of contraction is without precedent.”

Parts of this article quote John Mauldin of Millennium Wave Advisors

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