Consumer credit as a share of GDP has accelerated sharply in recent months. This explains why spending remains stickier than consensus expected.
Credit creation *is* money creation. When households borrow more relative to economic output, it temporarily props up consumption — but it's borrowed demand, not organic growth. The question isn't whether spending holds up today. It's whether this pace is sustainable, and what happens when the credit cycle turns.
History shows these inflection points matter. Rising credit-to-GDP ratios feel good on the way up. They feel very different on the way down.
Credit creation *is* money creation. When households borrow more relative to economic output, it temporarily props up consumption — but it's borrowed demand, not organic growth. The question isn't whether spending holds up today. It's whether this pace is sustainable, and what happens when the credit cycle turns.
History shows these inflection points matter. Rising credit-to-GDP ratios feel good on the way up. They feel very different on the way down.