With the "Great Recession" receding into the distant memories of many, American spending and borrowing on such expenditures as automobiles and student tuition increased in February while simultaneously seeing a drop in credit card spending.
According to data released by the Federal Reserve this week, American consumers have increased net borrowing for the sixth straight month, this time by more than $8.7 billion. Borrowing for items mentioned earlier (cars, education) increased by $11 billion while credit card borrowing decreased by $2 billion this month, following a $3 billion decrease in the month prior.
Total adjusted consumer borrowing for the year rose to $2.52 trillion, which means that American consumer borrowing now has surpassed borrowing levels that were incredibly weak throughout 2009 and 2010 and is on the heels of passing the borrowing levels that were present before the recession. Over the past three months, consumer spending has increased by a larger amount than at any other time in the past decade.
While borrowing may not be the best outcome for an individual and his or her financial success, there is a silver lining to the improving American economy. In February 2012, American consumers carried approximately $799 billion in credit card debt, which is 15 percent less than the high reached during December 2007. As has been highly reported, credit card debt in the United States is no longer the biggest form of debt; it was replaced by student loan debt during the recession as the number one borrowing segment of the economy.
Some data tends to suggest that Americans are spending more, but only more of their own money. Savings rates in the United States has dropped back down to levels not seen since 2009 (3.7%) and is well below the 4.7% average savings rate of 2011. Even with the job numbers for March showing the growth rate halving compared to February and the unemployment rate (8.2%) still being stubborn, more and more Americans are feeling better about making expenditures on cars and education than in years past.