Consumer Credit minus Federal Student Loans

The headlines on Consumer Credit releases the last few years have been misleading, since they are mostly reported using seasonally adjusted numbers and expressed as a percentage change from the previous period. Here are some examples...

June consumer credit up for tenth straight month
Consumer credit at highest in nearly three years
U.S. Consumer Credit Expands by $6.46 Billion

At least some of the stories are starting to catch on that almost all growth has been directly due to Federal government student loans.

source: FRB G.19 consumer credit outstanding NSA (http://www.federalreserve.gov/releases/g19/Current/#fn7b)

Total consumer credit has mostly flat lined since 2007. When you remove student loans, it has shrunk by wide margin. The next chart shows the inflation adjusted consumer credit levels in 2007 dollars. In real terms, consumer credit has declined significantly over the last 5 years, and if you remove student loans, it has declined by more than 20%. That is the real story on consumer credit. I am not even adjusting for population growth over the last 5 years.

I can understand the argument that the government should ramp up student loans at a time when segments of the population need new skills. It would have helped, though, to not make the student loan laws more harsh and loans not dischargable with the 2005 bankruptcy law changes. It's almost like lenders set a trap for students in 2005 in anticipation of the crash in 2008. Almost.