The Federal Reserve's montly report on Consumer Credit was released yesterday afternoon and Consumer Credit increased by 4.4 Billion in March. There are two big stories buried in the report - the massive increase in the Federal Government's exposure to Student Loans and the coming deluge of Consumer Credit that is about to hit the economy.
The massive increase in Student Loan debt has masked the deleveraging undertaken by consumers actually able to make payments on their current debt as the outstanding amount of non-student loans dropped by over 17% during the same time period that the Fed's were pumping out Student Loans and inflating a Higher Education Bubble.
Taking a look at the Federal Reserve's Senior Loan officer survey, An average of Bank's willingness to make Consumer Loans and Demand from Consumers for Consumer Loans is at a 15 year high. Historically, the readings from this survey have led Consumer Credit growth by 7-8 quarters. The implications are that Consumer Loans will continue to accelerate throughout 2012 and 2013 and will likely approach annual growth rates of 10% or more over the next year.