Lies, damn lies, and consumer credit figures

On the other hand the "unadjusted" data doesn't make too much sense either, unless you believe that consumers really did reduce their borrowing not by the 9.7% seasonally adjusted annualized rate reported but by an unadjusted 28%!

Looking at Discover's (NYSE:DFS) quarterly earnings results for the period ending in February and Capital One's (NYSE:COF) monthly portfolio releases, both issuers report February balances that are roughly in line with last November - which feels about right to me. (Effectively a weak Christmas season has been followed by slower repayment rate and higher loss rates effectively putting us back where we started.)

But if this is true, then the unadjusted Federal Reserve report is off by my count by between $20 and $25 billion.

So what happened? At the risk of wild speculation, I would not be surprised if most of this difference is a function of global financial institutions "participating" US credit card loans out of the US to their foreign bank affiliates. At a time when capital and liquidity are not uniform across their various distinct legal entities spanning the globe, banks are being forced to manage their business on a much more holistic basis. And knowing that increasingly subsidiary capital is a "roach motel" - in that it regulators will only let more in and not out, I expect that loan assets and securities are moving much for rapidly across banking affiliates as a result.

But the net impact is that "partial" data is being distorted. And yesterday's Consumer Credit figures are a perfect example.