This is one of those stories that isn’t sexy but that has huge potential impact. We’ve watched consumer credit trend up for a few years now. We’ve watched it wearily. One can feel it pulsing through the suburbs.
But we’ve noticed something we haven’t for a long time, partial fill ups at the gas pump. It seems I see more pumps, when I get gas, with $10 or $15 fuel purchases left on them as opposed to fill ups. This is one of those economic indicators that sets one’s antennae on “alert” after seeing a couple of recessions first hand as an adult. (Some people call it getting old.)
I remember something similar happening before the 2008 Crash, though the circumstances were quite different. Readers may remember the sharp move upward at the gas pump just prior to the Crash, so it made sense that people were limping along at the gas pump then. Folks were extended and then their fuel “bill” got a lot more expensive. I even remember traffic lightening up a bit during those months.
This time however there has been no spike in prices at the pump. Gas prices have trended up for a long time now, but no big moves. Yet more of these partial pumps. Perhaps consumers are becoming debt extended more slowly, but now it’s becoming noticeable.
But maybe not. Obviously this is just an anecdotal observation on a very few data points in a limited geographical area. However, it feels like something is going on in consumer-land and we’ll bet it has something to do with people tapping out their credit. We’ll also bet that the Prime Mover of crony capitalism, the Federal Reserve, is watching similar data points. (Or maybe they aren’t. We don’t know what’s worse frankly.)
According to this article from Zerohedge however, the consumer hasn’t hit the wall yet. So perhaps we are jumping the gun. But again, it feels like something is at least percolating out there.
More notably, after a two-month dormancy in using credit cards, American consumers returned to doing what they do best – spending money they don’t have – with revolving credit jumping by $4.8 billion, the highest monthly increase since May, and the second highest of 2018. The monthly increase brought the total to a new all time high of $1.042 trillion.