US Treasury Spending vs. Loans and Leases in Bank Credit

Longer term chart below comparing the leading UST spending levels per FY vs the level of Loans and Leases in the Fed's H.8 Bank Credit.  This is a mark-up, I have the basic interactive chart here for those interested.

Period "A" here is the period towards the end of the second Clinton administration, "B" is the time period corresponding to the 2 GW Bush administrations, and "C" is the recent part of the current Obama administrations.

Of note is the general linearity of the growth in US Treasury spending (present era excepted of course... its linear alright, but going down! .... can you believe it!?) and general NON-linearity of the growth in Loans and Leases in the H.8 Bank Credit, that is until "something bad" usually happens.

Recessions have occurred towards the end of period A and the end of period B; while it seems too early to tell what the outcome will be for period C, which is our current work in progress.  While I think it fair to say things currently seem a bit shaky we should probably withhold judgement for now; but this is for sure a troubling picture developing here.

There is a divergence developing between the upper and lower lines presently due to BOTH a recent increase in this part of Bank Credit and for the first time in modern history, we are experiencing a decline in Treasury spending at the same time.

As the upper and lower lines diverge, it seems like we increase the likelihood that we will cause a systemic malfunction.

Below is the current situation as far as a short term comparison of FYTD Treasury spending, we are about $40B behind last year's spending level at this point in the FY (not good, keeps the right most red line in the chart above down-sloping).  We are not sure if this trend will continue for the rest of the FY but we are keeping an eye on it and intend to keep this chart updated daily.