American Consumers are Borrowing More
Americans increased their borrowing by $11.6-B in March as a big increase in the category that covers auto and student loans offset the largest monthly drop in credit card borrowing in more than five years.
The Federal Reserve says the March increase in total debt was below the $13.6-B increase in February and was the smallest monthly gain since September. Borrowing for student and auto loans rose a solid $14.2-B, the 3rd month running of $14-B+ gaineers.
Borrowing in the category that covers credit cards fell for a 2nd straight month, dropping $2.6-B following a decline of $514.5-M in February. The March contraction in credit card debt was the biggest since a $4.4-B fall in December 2012.
Consumer borrowing trends are closely monitored for clues they can provide about the willingness of consumers to borrow more to support their spending.
Consumer spending accounts for 70% of economic activity.
A sharp slowdown in consumer spending in the 1st 3 months of the year contributed to slower growth in the overall economy, as measured by GDP.
The GDP grew at a 2.3% annual rate in Q-1.
Analysts believe signs are pointing to stronger consumer spending in Q-2 and are forecasting that GDP will rebound to around 3% in the Quarter.
The borrowing gains pushed the monthly consumer debt total to $3.87-T. The monthly borrowing report does not include mortgages or any other debt secured by real estate such as home equity lines of credit.