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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (9829)3/10/2004 12:19:54 PM
From: russwinter  Read Replies (2) of 110194
 
Contrary Investor excerpt 3-9 issue about little correlation now between jobs and consumer credit expansion:

"When it comes to coincidental household credit expansion for this cycle of contracting payroll employment, our current experience could not be more distant from what was seen in the early 1990's. In January of 1991, the year over year change in payroll employment when negative and stayed there until April of 1992. During this period, consumer credit outstanding in this country actually contracted by ($8.9) billion. It represented a (1.1%) contraction relative to the January 1991 base of $806.6 billion in outstanding consumer credit. In the current cycle, the year over year rate of change in payroll employment first went negative in July of 2001 and has stayed there until the present. Over this period of time, total consumer credit outstanding has risen by $255 billion, a 14% expansion relative to the $1.77 trillion base in July of 2001. Despite a complete lack of job growth, are households continuing to take on additional consumer debt comfortable in the fact that a significant turn in labor markets lies just ahead? Or is household leverage acceleration happening simply to meet basic living expenses for those caught in the unemployment maelstrom? In terms of this being an atypical economic recovery, the current period takes the cake in terms of the relationship between the payroll employment and consumer credit growth."
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