US consumption is driven by credit not wage growth

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US consumption is driven by credit not wage growth. The chart attached illustrates where money is flowing during periods of cheap credit. Following the sub-prime mortgage crisis of 2007/2008 understandably regulations around mortgage lending tightened. As you can see from the graph the total number of loans has reduced by about 20% since the peak in 2008. However, with interest rates at record low levels auto lenders have gotten aggressively permissive about lending. The result? US auto sales have made a huge recovery. The surge of auto lending pushed the number of US car loans above the number of US mortgages in early 2013, a turnabout from the status quo over the previous decade. (VIEW LINK)

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