US Consumers Upped Their Borrowing in March

×
credit cardsWASHINGTON (AP) - U.S. consumers swiped their credit cards more often in March and took out more loans to attend school, driving overall borrowing up by the most in more than a decade.

Total consumer borrowing rose $21.4 billion in March, the Federal Reserve said Monday. That's the seventh straight monthly increase and the largest since November 2001.

A measure of auto and student loans increased by $16.2 billion. A separate gauge of mostly credit card debt rose $5.2 billion after declining in January and February.

The increase pushed total borrowing up to a seasonally adjusted $2.54 trillion. That's slightly below the all-time high of $2.58 trillion reached in July 2008, eight months after the Great Recession began.

After hitting that peak, consumers cut back on borrowing sharply for more than two straight years. They began taking on more debt again in the fall of 2010 and have stepped up borrowing in recent months.

The steady rise in borrowing is generally considered a good sign for the economy. It suggests consumers are more confident and comfortable taking on more debt.

Analysts said stronger hiring since last fall has encouraged more Americans to borrow more.

But another reason for the increase was a big surge in student loans. Paul Edelstein, director of financial economics at IHS Global Insight, said that could reflect an effort to take out loans in advance of a scheduled jump in rates this July.

Cooper Howes, an economist at Barclays Capital, said he expects the trend in consumer borrowing to continue in coming months as the economy improves. Still, he said the increase in student loan debt could reflect some people are having trouble finding jobs and are opting to go back to school.

"We expect that student loan growth will continue to push the level of consumer credit higher and we look for (credit card debt) to expand as banks become more willing to lend," Howes said.

The overall economy grew at an annual rate of 2.2 percent in the January-March quarter, helped by the strongest growth in consumer spending since late 2010. Consumer spending accounts for 70 percent of economic activity.

Still, job growth has slowed sharply in the past two months, while wages have lagged inflation. That has raised concerns that consumers might pull back on spending later this year.

Employers added just 115,000 jobs in April, the government said Friday. That followed the creation of 154,000 jobs in March. From December through February, the economy added an average of 252,000 jobs per month.

The employment report also noted that the average worker's hourly pay rose by just one penny in April. Over the past year, average hourly pay has ticked up 1.8 percent to $23.28. Inflation has been roughly 2.7 percent. Which means the average consumer isn't keeping up with price increases

With weaker income growth, U.S. households haves spent more while saving less. The savings rate was 3.8 percent of after-tax income in March, nearly a full percentage point below the 4.7 percent where it had been three months before. For all of 2011, the savings rate declined to 4.7 percent of after-tax income, compared to 5.3 percent in 2010.

Households began borrowing less and saving more when the recession began and unemployment surged. While the expectation is that consumers are ready to resume borrowing, they are not expected to load up on debt the way they did during the housing boom of the last decade.

The Federal Reserve's borrowing report covers auto loans, student loans and credit cards. It excludes mortgages, home equity loans and other loans tied to real estate.

Increase your money and finance knowledge from home

Getting out of debt

Everyone hates debt. Get out of it.

View Course »

Banking Services 101

Understand your bank's services, and how to get the most from them

View Course »

Add a Comment

*0 / 3000 Character Maximum

20 Comments

Filter by:
chris1011

democracks0, imalibnow2, n7monthsocrapleft .. you guys are on here 24/7 complaining about how tough things are and blaming the current president for your personal problems. Know why? Because when the market crashed in '09, you panicked and sold, at the bottom! Lost half your paltry worth in that clever move, didn'tcha!!! Now you're looking longingly at the market that has more than doubled and realized that you missed out.
Know why I'm upbeat on the current state of things? I bought what you sold, and have been collecting the dividends accordingly. I've made more money under Obam than I ever made under the last one.

May 09 2012 at 11:42 AM Report abuse -2 rate up rate down Reply
democracks0

Liberals are always blaming Bush for everything, funny how even Obama said we were better off 4 years ago then we are now. Gee I think Bush was President 4 years ago.

May 08 2012 at 8:40 PM Report abuse +2 rate up rate down Reply
1 reply to democracks0's comment
itacurubi

Perhaps, but each day we approach the 4th anniversary of the 2008 crash and realize that what Bush did was blow a bubble.

May 09 2012 at 9:47 AM Report abuse -1 rate up rate down Reply
2 replies to itacurubi's comment
democracks0

Ah lets not forget what Pelosi and Reid did, nothing!! Zip nada. They led us right into the recession and did nothing. Yet like all Obamites point the finger of blame elsewhere.

May 09 2012 at 10:27 AM Report abuse +3 rate up rate down
chris1011

Itacurubi, don't expect these Cons to understand logic. Cognitive dissonance has replaced logic in their feeble brains.

May 09 2012 at 11:44 AM Report abuse rate up rate down
donut999

Very convenient short memories. The Bush years were not that long ago. Obama was handed the helm of the Titantic. Net, things would not be much different today if McCain had taken the helm. Involuntary Keynesian economics were fully engaged.

May 08 2012 at 4:14 PM Report abuse -2 rate up rate down Reply
1 reply to donut999's comment
democracks0

Obama wasn't handed anything. He wanted the job. If he wasn't up for it he shouldn't have run for office.
Pelosi and Reid led America right into the recession and didn't do a thing. They just sat on their hands.

May 08 2012 at 8:44 PM Report abuse +1 rate up rate down Reply
greenblue6425

Two things - don't let puff pieces about 'improvement' get to you, and if you don’t need something, don’t buy it.

May 08 2012 at 1:47 PM Report abuse +1 rate up rate down Reply
ensgavry

Obama has done little to solve the unemployment problem and inflation should be a topic, but mainstream shoves it under the rug. Romney's not any better, but we're not allowed a real president these days.

May 08 2012 at 1:42 PM Report abuse +4 rate up rate down Reply
#####

Vote Repub-o-crat? Okay, It's their turn to screw us for 4 years. lol

May 08 2012 at 1:38 PM Report abuse -4 rate up rate down Reply
1 reply to #####'s comment
democracks0

Nothing could be worse then the current administration.

Obamas a disaster.

May 08 2012 at 2:28 PM Report abuse +5 rate up rate down Reply
democracks0

The desperation of the Huffington Post to prop up Obama has gotten to the point of beyond ridiculous. I just read today that there is a budget surplus!!! Obama has no budget. Hasn't had one for over 1000 days. Liberals
will try and spin this around and around until their heads fall off.

Obamas a fiasco..........................

May 08 2012 at 12:33 PM Report abuse +4 rate up rate down Reply
gmydogbud

Our government has Hundreds Of BILLIONS To GIVE TO Countries & People Who HATE US - They Must Have Hundreds Of BILLIONS TO GIVE TO American Citizens. They Just Do Not Want To Help Their OWN, Unless That Is If You Are A Lobbyists, Big Business, Union Or A Friend Of Any Member Of Congress Or The President. Then They Have Hundreds of Millions To Give Away & Put American Taxpayers, Their Childern & Grand Children In Debt or The Poor House - With Their Largess!!

May 08 2012 at 10:39 AM Report abuse +4 rate up rate down Reply
charlgadigi

people are borrowing to put gas in there car we go threw every time credit card companys and gas companmys rip american off hope obama wins again if not we have 4 year of bush aagin with rep party

May 08 2012 at 10:03 AM Report abuse -3 rate up rate down Reply
1 reply to charlgadigi's comment
democracks0

You might try going back to grade school for another 4 years. Maybe then you can try posting your comment again so it makes sense.

Obamas a fiasco

May 08 2012 at 11:03 AM Report abuse +10 rate up rate down Reply
almagayle50

Obama inherited a huge deficit from both Bushes. If you look at when the deficit went up, it was under the Bushes. And while, the economists will use the rise in debt as a big sign we are more optimistic, actually it's inflation that's forcing folks to use credit again - that and the fact that as we've cut spending for years, everything is wearing out and some things have to be replaced. Hope the 1% is having a good time.

May 08 2012 at 9:52 AM Report abuse -4 rate up rate down Reply
1 reply to almagayle50's comment
democracks0

Obama inherited nothing. He wanted the job and campaigned for it for most of his term as senator. He should have been paying attention instead of running around campaigning and voting present. If he wasn't up for the job he shouldn't have run for president.

Obamas rich he's the 1% and I'm sure is having a good time living a life of luxury on the tax payers dime.

May 08 2012 at 11:10 AM Report abuse +6 rate up rate down Reply