Consumer credit surges 7.7% in June

[kpete]

Source: WSJ

MARKET PULSE Archives
Aug. 5, 2011, 3:00 p.m. EDT
Consumer credit surges 7.7% in June

By Steve Goldstein
WASHINGTON (MarketWatch) -- Consumer credit grew 7.7%, or $15.5 billion, to a seasonally adjusted annual rate of $2.45 trillion in June, the Federal Reserve reported Friday. That marks the biggest jump in consumer credit since August 2007. Revolving credit such as credit cards grew 7.9%, or $5.21 billion, while nonrevolving credit such as auto and student loans grew 7.6%, or $10.32 billion.

Read more: http://www.marketwatch.com/story/consumer-credit-surges-77-in-june-2011-08-05

[RUMMYisFROSTED]

1. Happy days are here again, the skies above are clear again...

[roguevalley]

15. people are living on credit cards to make ends meet. been there, done that.

[DCBob]

2. so is that good or bad or both??

it could be good in the sense people are optimistic and consuming but its bad that people have to borrow to buy stuff.

[Ruby the Liberal]

5. I would say bad because

The expenditures have already been made, yet the consumer sector is still hurting - this didn't help them to a noticeable degree. Too much debt will sink additional purchases in the future.

The only qualifier I would put on this is if the debt is related to investment (not 'investments') like additional schooling, tools for the person's job, opening costs for a business, etc.... If the debt is not investment related (Flat screen TVs, dinners out) then it will prove to be a disaster.

[glowing]

7. Just an example at my place of business... I work at a hotel.

Family style; slightly cheaper than Holdiay Inn Express. More people are taking a break. It may not be for an entire week, but it is for 2 or 3 days at a time to come and enjoy the beach. We aren't on the beach, far enough away to not pay the extra price for a view, but close enough to be convenient. We have more small businesses who utilize us, coming in and out as well. This is good, because people are working and building again; not as much as before the crash, but its slowly coming along.

Because of our increased percentage of occupied rooms, our business has to utilize the company credit card more often to stock up on breakfast items, supplies, and maintenance issues. On the other hand, the prices are still a bit cheaper than we would wish and more people are utilizing every "free" item the hotel offers. A few years ago, people would chose to go out for breakfast for a hot meal. Now, they eat their bagels and donuts and juice. So, the room price is still slightly depressed and the costs have increased slightly for the "free" options. I mean even toothpaste and extra soaps and shampoos are asked for. Towels, pillows, and in room items have a tendency to walk off the property much more often. Our housekeepers are tipped less or not at all more frequently. And because the business isn't projecting large amounts of additional future room's revenue, i.e., we don't show a lot of planned future rentals, nobody on the property has gotten a raise in a couple of years, and some of us have still not had our work time restored.

AND because of the oil spill in 2010, we were behind money wise from last year. It was a big hit to tourism in our area in FL for that gusher to spout just as the season was getting started. However, most people who are smart enough to walk and chew gum at the same time who live in FL and work in an area of hospitality, restaurants, tourism, or fishing, have claimed a file with BP. Sometimes they are more than generous; other's not so much. For the most part they have been pretty good at paying the loss of income to people for 2010. For my husband and myself, it was a lot of money. It came just at a time that we really needed it. We were getting help from my parents every month. For the first time ever, I am able to help them now that they need it. We have been able to pay off our credit card bills, our car loan, and still have leftover for the new bed we desperately needed and the computer that we soooo need and do a few things to the house that we have put off for too long. So, we are stimulating in our own way. AND there's the crux of the issue. If you give money to those who live week to week, we know how to spend it. We all have things we have held off of doing because maxing out the credit card isn't to smart right now and homes have lost so much value, they can't be used to take a loan against to do home improvement. It would have made more sense for the Fed to take the 16 trillion in $ they gave to the banks, and disperse it among Americans. The economy would be humming, housing market stabilized, and people happy as a little clam to feel secure. Too bad they just made rich people wealthier.

[Ruby the Liberal]

8. You just made the case for velocity of money driving the economy

(Bottom up, not trickle down). Awesome job.

:applause:

[glowing]

14. Thank you. Its not that hard to understand the basic idea of giving people

with less, more... We actually spend it. Especially now because we haven't been spending. Most of us are shoring up our debts and holding onto our money in case we are thrown out of our jobs still. We all know unemployment pays crap and you can't qualify for the safety net programs because still having items of value and a high taxable income rate the year before often disqualifies one's family from getting food stamps or Medicare/ Medicaid. AND lots of states are pulling back on the time one will be paid unemployment. It doesn't matter what the US govt wants states to do. The states don't have the money to pay, so places like FL where I live p(R)ick Scott is making it like 13.5 wks and making the qualification extremely hard to receive. CRAZY. AND then the idiot doesn't take fed money for the high-speed rail and 24,000 jobs. Hello, he'd rather go make donuts. Idiot.

We all know the idiots who are in congress understand this. They are paid by their Masters of the Universe to lie and take... They want to send us back to the days of serfdom/ slavery. Sick bastards the lot of them.

[ixion]

3. Which means people are charging staples like gas and groceries

and when the credit cards are maxed out, that's when things get interesting in the bad way.

[Po_d Mainiac]

4. you got it

with all the other numbers flat-lining....It ain't a positive

[Ruby the Liberal]

6. Excellent observation

and a terrifying concept.

[ProgressIn2008]

9. This is my take too, at least from what I'm seeing around me. nt

[customerserviceguy]

10. It may also mean

that banks are issuing credit cards, and upping credit limits, to people that they might have shunned a couple of years ago. An example would be a person who had a less than stellar credit rating a few years ago, when times were good, who managed to hold on to his/her job over all that time. It would indicate some measure of financial strength.

Right now, banks can borrow money for practically nothing, if they can make 20-30% off of it with borrowers who have some reasonable likelihood of paying it back, they can still make a profit even if the losses are higher with the new borrowers taken in.

[ixion]

11. Uh, yeah, it may, but it's not

because they're not issuing credit cards and upping credit limits, they're doing just the opposite. They're raising interest rates, lowering credit limits, and forcing people to close accounts with so-called "opt-out" programs.

[customerserviceguy]

12. I know that happened from 2008-2010

But has it still been going on? Banks actually had to pay at least a little something in interest for deposits in those years, and they were worried about staying afloat after the crisis of late 2008.

Now they've been fully bailed out, and I suspect they're on the prowl for more rapacious profits again. Of course, they're not going to be too cozy with people who lost jobs during the recession, but there are still a lot of folks out there who have retained employment during this time, and they may be ripe for the pickings.

[PSPS]

13. This is very bad. It means savings and wages are tapped out.