Today’s chart follows on from yesterday’s RBA release of credit and lending aggregates (find here, with charts) and plots the total private credit (housing, personal, business, but not government) data since 1976:
Added to the plot is an exponential trendline, with a superb fit until the GFC, where total credit growth has tapered from the 30 year plus trend. For the mathematically minded, the R-squared value is 0.9824
Consider these statistics: since October 2008 (the start of the GFC) til October 2011, housing credit in Australia has increased from $986 billion to $1212 billion, or 7.1% per year. Yes, that’s right – since the GFC, Australians have borrowed almost a quarter of a trillion dollars in debt to buy, in the majority, the same property that existed beforehand.
Businesses? They paid off nearly $83 billion in debt during the same period.
Thankfully, private credit doesn’t matter when considering the economy.