Latest Z1 Report: Credit Growth Continues, But Slightly Slower Pace; Demographers: Births Continue, But Slightly Slower Pace

The Fed's latest credit market report is out.

The data shows that credit grew 4.21% yoy in 2014 Q1. This is the slowest pace since 2012, but it is in line with the post-2008 recovery. However, this is far below the yoy growth rates seen prior to the recession.

This chart is a break down of the total growth in credit since 2008 in percentage of the total debt increase. As can be clearly seen, without the federal government's borrowing, there would have been full on credit deflation.

The federal government debt has grown nearly 100% since 2008. The financial sector, once the largest sector in the credit market, is now on pace to be surpassed by the federal government.

All of this tells us that the economic recovery is not healthy. The financial sector had to deleverage, so its decline as a percentage of the total market is not an issue, but the rapid rise in the federal debt is important. It is responsible for propping up the economy, almost entirely given that it is roughly 100% of the increase in debt since 2008. Corporations are taking advantage of low interest rates, but they aren't investing the money. In any event, their borrowing could not hold deflation at bay in the absence of federal borrowing.

In not unrelated news, Women are having fewer kids, and demographers don't know why

Demographers expected the fertility rate to fall during recession, as financially strapped families put off childbearing. But what has surprised some demographers is both the depth of the decline and the fact that fertility has continued to drop even over the course of the country's five years of slow but steady recovery. The rate has fallen steadily each year since 2007, when it stood at 2.1 percent.

Maybe there is something affecting both the credit market and the fertility rate.......