Consumer credit statistics show confidence in economy is growing
Consumer credit increased in March 2010, the Federal Reserve reported Friday. The $1.95 billion increase in consumer borrowing surprised economists, who had expected consumer debt to continue a decline that resumed in February after a January spike in money loans. The unexpected March consumer credit statistics mark only the second time the Fed has reported a consumer confidence increase in 14 months. Some believe that consumer spending, making up 70 percent of the economy, is trending to a level that could help strengthen economic recovery.
Consumer confidence on the upswing
News of the March consumer credit increase comes hot on the heels of a Friday Labor Department jobs report announcing that 290,000 jobs were created in April. The jobs increase was accompanied by an increase is the unemployment rate. However, the report said the improved economic outlook is motivating people who had quit looking for jobs during the recession to resume looking for work.
Consumer debt figures a surprise
The increase in consumer credit statistics surprised many economists. Bloomberg reports that a survey of 33 economists had forecast consumer debt in March would drop further from an $11.5 billion decrease reported in February. Projections ranged from a consumer debt decrease of $8.5 billion to an increase of $8 billion. Economists surveyed by MarketWatch expected consumer credit to decline by $4.5 billion in March. The March gain represents a 1 percent rise at an annual rate following a 3 percent drop in February and a 3.2 percent January increase.
Federal Reserve consumer credit statistics
Federal Reserve Consumer credit statistics show that non-revolving debt, including loans for cars and mobile homes, rose by $5.1 billion in March. Bloomberg reports that auto sales in the U.S. rose to the equivalent of 11.8 million annually in March — the strongest performance since August 2009, according to industry statistics. The pace had slowed to 11.21 million in February. Auto sales in March were boosted by Toyota incentives the company offered to make up for record recalls. Ford led U.S. automakers with a 40 percent sales increase. Sales at General Motors increased 21 percent.
Federal Reserve Consumer credit statistics for revolving debt, such as credit cards, fell by $3.2 billion in March. The central bank’s report doesn’t cover borrowing secured by real estate.
Consumer borrowing will fuel recovery
The low rate of personal savings in the United States has aroused a sense of alarm for years. But the Associated Press reports that in the wake of the great recession, economists now say that consumer debt needs to stabilize and grow to prevent derailing the modest recovery under way, although they expect that the rebound will be restrained by tighter credit conditions imposed by many banks.