Saturday, January 25, 2014

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.


bagwan said...
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googleheim said...

frankOstein !

YoY Spending needs more months
if not years of months so we can see how the February & March outflows for IRS refunds are a yearly SPIKE.

again - if they do nothing for the debt ceiling & something bad happens, then they will never be able to use that threat again.

if they do nothing for the debt ceiling & NOTHING happens, then they will never be able to use that threat again.

The current rise in loans and retractment of outflows means one thing - they have TARP money to use.

Matt Franko said...


I am trying to synch up with business/firms wrt this data...

To firms its, "month/quarter/year" that are the relevant time frames... and they look at MoM, QoQ, YoY so that is what I am intending to match up with here...

2014: I still have some hope that we are soon going to see a bit of a YoY increase in flows starting soon... but the $37B we fell behind in Oct/Nov due to shutdown imo cannot be recovered so that will be in the YoY figures, but if we get present flows back up above last year soon I think firms can more than 'muddle thru' for the whole year with that govt support...