Infographic: U.S. Debt Interest Payments Reach $1 Trillion

Source : Visual Capitalist

Infographic: How Government Debt-to-GDP Ratios of Selected Countries Have Changed Since 2000

Source : Visual Capitalist

Chart: China’s Macro Leverage Ratio Rose Further from Record High in 2023 in Q1 2024

China’s overall debt ratio continued to climb in the first quarter to 294.8% despite slower growth in debts, indicating a weaker expansion of the economy, according to a state-backed think tank.

The macro leverage ratio, which measures total outstanding nonfinancial debt as a share of nominal GDP, inched up another 6.8 percentage points after reaching a record 287.8% at the end of 2023, data from the National Institution for Finance and Development (NIFD) showed.

Source : Caixin

China’s Credit Growth Slows as Lunar New Year Crimps Financing

China’s bank loans expanded at the slowest pace on record in February, underscoring weakness in borrowing demand despite steps by the central bank to ease policy and help the economy.

The stock of yuan loans grew 9.7% in February from a year ago, the lowest in data going back to 2003, according to figures released by the People’s Bank of China on Friday. It was also the first time the rate dropped below 10%.

The stock of aggregate financing — a broad measure of credit — expanded just 9%, also near a record low. The M1 money supply measure, which includes cash in circulation and corporate demand deposit, weakened to 1.2%, the lowest level since January 2022. That indicator is closely watched, given a slowdown signals that companies are not planning to use money in near term to invest or expand production.

“The key problem is demand in the real economy, and that can’t be solved just by monetary policy,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Plc. “Markets may have to lower expectations for credit growth further.”

Borrowing demand in the world’s second-largest economy has been sluggish, and weakness at the start of 2024 threatens to make Beijing’s economic growth target of around 5% all the more difficult to reach. China has also experienced weak or negative price growth across its economy in recent months, which should weigh on loan growth.

China’s budget released this month suggests the country is aiming for nominal growth of above 7% this year, according to analysts. Top economic policymakers have pledged to keep money supply and credit growth in line with the growth target as well as an inflation target of 3% this year, with the PBOC previously saying it would ensure credit grows rapidly and at a sustainable pace throughout 2024.

What Bloomberg Economics Says …

“Combined January-February data — which smooth out distortions from the Lunar New Year — showed total new loans fell 342 billion yuan from a year earlier. The People’s Bank of China kept rates unchanged earlier Friday. The credit data suggest that wasn’t optimal. What’s needed is a strong dose of stimulus to lift confidence and spur growth.”

— Eric Zhu, economist

China’s central bank has taken some steps recently to spur demand, including by lowering a key reference rate for long-term loans including mortgages by a record amount last month, and cutting the amount of cash banks must keep in reserves. But that’s done little to revive activity so far.

Wary of flooding the market with too much liquidity that isn’t being routed in ways that support growth, the PBOC earlier on Friday drained cash from the banking system for the first time since November 2022 via its one-year policy loans. The move was seen as one to deter financial speculation in an environment where monetary stimulus seems to be fueling a bond market rally more than helping the economy.

More fiscal stimulus and a bottoming-out of the property market will be required to help credit demand rebound, according to Ding. In the meantime, a slower money and credit growth in the range of 8% to 9% may be “desirable” for the central bank since it has put more focus on using loans more efficiently, he said.

There may still be room for the PBOC to cut interest rates this year, even though economists are divided on the timing of a possible move.

“Weak credit growth at start of year signals more room for policy support,” said Lynn Song, chief China economist at ING Groep NV.

The PBOC highlighted in its last monetary policy report that markets shouldn’t only look at the growth rate of credit but rather how financing is satisfying the need of key areas of the economy, such as the green and tech sectors.

In a sign that bodes ill for the troubled property market, households’ mid and long-term loans — a proxy of mortgages — contracted in February. That suggests families repaid more home loans than they ramped up new borrowing.

February is typically a slow month for credit expansion. Banks aren’t usually in a rush to meet their quarterly loan targets during the period. The Lunar New Year holiday, which was a day longer than usual this year, reduced the number of working days.

The release also raised eyebrows due to its later-than-usual timing. It was the first time since February 2020 that the data was published on or later than the 15th, which is usually at the end of a five-day window for its release.

Source : BNN Bloomberg

Mapped: Credit Card Delinquency Rates in the U.S. by State

See large image . . . . . .

Source : Visual Capitalist

Canadian Households Among the Wealthiest, But Debt a ‘Double-edged Sword’

Luca Caruso-Moro wrote . . . . . . . . .

Canada has the highest level of household debt to disposable income of any G7 country, Statistics Canada reported Wednesday.

The agency wrote that its 2021 census survey revealed debt-to-income ratio reached more than 180 per cent, beating the United States and Germany by a large margin. Both of those countries posted rates of 100 per cent.

That means that, for every dollar Canadian households had in disposable income, they owed about $1.85.

For contrast, in 1980, the rate was just 66 per cent.

The agency attributed Canadians’ high levels of debts to homeownership, describing housing as a “double-edged sword” – a significant contributor to the overall wealth of the middle class while resulting in “imbalances between assets and debt.”

Canadians in the middle to low income quintiles were generally spending more than they were saving through 2023. There was also a strong correlation between the saving capabilities of homeowners versus renters. Owners with mortgages were saving more than they were spending, while renters were not.

“For an average household, real estate represents about 55 per cent of their wealth and mortgages represent most of their debt—trends even more pronounced for middle-class or working-age families,” wrote the agency.

It also says Canadians over 55 held 65 per cent of total wealth in Canada, suggesting “major risks for intergenerational mobility” in decades to come.

Source : CTV

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Read also at Statistics Canada

Research to Insights: Disparities in Wealth and Debt Among Canadian Households . . . . .

Chart: U.S. Interest Cost of Government Debt Continues to Surge

Source : BullionStar

Chart: U.S. Fed Hikes Had Limited Impact on Consumer as Household Debts Are Mainly Fixed Rate

Source : APOLLO Academy

Chart: China’s Outstanding Personal Mortgage Loans Post First Fall in Almost 20 years

At the end of 2023, the country’s outstanding personal mortgage loans totaled 38.17 trillion yuan ($5.4 trillion), according to data provided Friday by the People’s Bank of China (PBOC). It was down from the 38.8 trillion yuan at the end of 2022.

Source : Caixin

China’s Debt-to-GDP Ratio Climbs to Record 287.8% in 2023

China’s debt-to-GDP ratio climbed to a new record high in 2023 despite the slow pace of borrowing, reflecting the economy’s weakening growth, a new report from a state-backed think tank shows.

The macro leverage ratio, which measures total outstanding nonfinancial debt as a share of nominal GDP, rose to 287.8% in 2023, 13.5 percentage points higher than a year ago, according to a report by the National Institution for Finance and Development (NIFD).

Source : Caixin