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Consumer credit in the USA fell by a 5.8% annual rate in August to US$2.46T, the Federal Reserve reported Wednesday. The US$12B dollar decrease, much worse than the US$7.5B decline that economists forecast, followed a record cut of US$19B in July, or a 9.1% annualized drop. For August, consumer credit in revolving loans, a category that includes primarily credit card debt, plunged by 9.9% at an annual rate. Demand for revolving credit used to finance cars, vacations, education and other things, meanwhile, was down 1.6%. The strength in consumer borrowing will continue to be weak as job layoffs are rising, according to economists. The Labor Department reported last week that the unemployment rate rose to 9.8 percent in September, the highest in 26 years. Many economists believe the rate might hit double digit next year.

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In China the Government owns the Banks; the bankers do not own the Government. China’s stimulus plan is working better than in the US and the UK because the government is using the banks for public ends, rather than allowing the banks to use the government for private ends. In the USA, the banks are the most powerful lobby on Capitol Hill; they own the Government.

The USA is spending trillions of greenbacks to bail out its banking system, leaving its economy to languish, as China, now called a “miracle economy,” decoupled from the rest of the world, is maintaining a phenomenal 8% annual growth rate. That, by the way, is being questioned by lots of Pols, commentators, economists and other talking heads, as they ask how that growth is possible, when other countries relying heavily on exports have suffered major downturns and remain in the doldrums. Read more

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US consumer borrowing fell for a 3rd straight month in December, the longest continuous period in 17 yrs, as households cut spending amid this steep recession and rising job layoffs. The US Federal Reserve said that consumer borrowing dropped at an annual rate of 3.1 % in December. The US$6.6B decline was nearly double what analysts expected, following a US $11B drop in November, the biggest monthly decline on record going back to 1943.

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