Annual Total US Credit and Loan Growth Turns Negative

posted by Nima

October 2, 2009 · Posted in General Economics 

Total US Credit and Loans have now contracted by $979 billion since their peak in October 2008:

total-credit-September-2009

The annual growth rate has turned negative for the first time since beginning of the the weekly recordings, and and as far as I could find now posts the biggest annual decline since the great depression:

total-credit-annual-growth-september-2009

Keep in mind that all this has happened in spite of an environment of renewed optimism and confidence that the economy will bounce back hard.

The biggest surprises and catastrophes always occur when public opinion is completely out of whack with reality. Now is such a situation. How much longer it will last no one knows. But rest assured that a double dip is on the horizon…

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Comments

2 Responses to “Annual Total US Credit and Loan Growth Turns Negative”

  1. Bob V on October 3rd, 2009 10:14 am

    Two questions:

    1) What is the difference between “Loans & Leases” and “Credit?”

    2) What caused the big increase around Oct. of 2008? Where did that credit come from and who took on the debt?

  2. Nima on October 3rd, 2009 10:35 am

    1. A loan is actual delivery of a definite sum of money under certain terms that stipulate repayment period and interest payments. Credit is the provision of a maximum sum of money that can be drawn upon under certain terms and interest is only due when it is actually drawn upon, like for instance a credit card or a home equity line of credit.

    2. October 08 was right around the time when the government and the Fed started bailing companies out, making available emergency loans and swapping Treasurys against garbage in temporary repurchase agreements, so I assume that it has to do with that.

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