Increase in consumer borrowing doubles march forecast

Having racked up bit more credit card debt than I intended once myself I can tell you that this is not a strategy for sustainable economic growth. I wonder how much of this increase is for interest, fees and penalties…

For the sake of us consumers I hope that many, many of the coming stimulus checks will go to paying down these debts.

—————————————–

Bloomberg.com: U.S.
U.S. Consumer Debt Rises More Than Forecast in March (Update2)
By Vincent Del Giudice

May 7 (Bloomberg) — U.S. consumer borrowing jumped more than double the amount economists forecast in March, indicating a slowing economy is forcing Americans to accumulate credit-card and other forms of debt.

Consumer credit increased by $15.3 billion for the month to $2.56 trillion, the biggest monthly rise since November, the Federal Reserve said today in Washington. In February, credit rose by $6.5 billion, previously reported as an increase of $5.2 billion. The Fed’s report doesn’t cover borrowing secured by real estate, such as home-equity loans.

Consumers are turning to credit cards after banks tightened standards for home-equity loans and other borrowing. The March figures brought U.S. consumer borrowing in the first quarter to $34 billion, the most since the first three months of 2001, when the economy entered its last official recession.

“Consumers are strapped as incomes are not keeping up with inflation and this is leading them to rely increasingly on credit to see them through the worst housing downturn since the Great Depression,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York. “The days of extracting cash from one’s home to spend on goods and services are long gone.”

Advertisements