This time may indeed be different. With virtually all of the income gains going to the top and a significant portion (50%+-) of the debt reduction coming from foreclosures and bankruptcies, the income that supports this debt hasn’t changed much. Fabius Maximus makes a great point above about student loans (where’s the income that supports these?), but who’s watching the TBTF’s and who’s really taking on the additional risk?

(2) We know Federal education loans are rising, because those are the only type of Federal consumer loans. Given what we know, its a reasonable deduction that student loans (all sources) are rising fast. That’s probably not good, given the estimates of high default rates.

(3) Auto loans are probably rising along with auto sales, but the G19 gives little info on the magnitude. But even so, other loans must be *decreasing*, since the total non-education is down almost 1/5 from 2007 and roughly flat YTD. IMO, that’s the key take-away from this data — more important than the aggregate return of consumer loans to (almost) their 2008 peak.

US Consumer credit since 2007 and YoY, as of Q1 2012 (non-seasonally adjusted):

Type 2007 Q1-2011 Q1-2012
Total $2,555.3 $2,401.9 $2,522.2
Federal $ 98.4 $ 355.2 $ 460.2
Non-Federal $2,456.9 $2,046.7 $2,062.0

Changes:

Type since-2007 YoY
Total – 1.3% 5.0%
Federal 367.7% 29.6%
Non-Federal -16.1% 0.7%

Notes:
Loans by type are reported only non-seasonally adjusted.
All Federal loans on the G19 are education loans.
Not all education loans are from the Federal government.

http://www.federalreserve.gov/releases/g19/current/default.htm

As home prices drop, so do the available home equity loan amounts, forcing people out of borrowing tax free to borrowing with no tax deduction. This also adds to the real interest expense and forces higher borrowing amounts to equal the same net available loan.