The Federal Reserve announced that it had significantly understated debt balances in the period from December 2010 to July 2012. The central banking organization would revise its data to reflect newer, more accurate data.
According to the release, the Fed is revising its data from December 2010 on with a $130 billion adjustment to $2.708 trillion. The Federal Reserve reports a data point known as total consumer borrowing each month. Revolving balances – primarily credit cards and charge cards – are a portion of total consumer borrowing.
The revision pushes total consumer debt back over prerecession levels. Previously, analysts had thought that consumers were too tepid to increase their debt balances for fear of a future recession. The new data shows the opposite: consumers have been adding heavily to their debt balances for nearly two years.
Most recently, the Fed reports that consumers cut back on credit card debt in July while spending the most in five months. That month, credit card balances ran just over $850 billion – well off the high set before the financial crisis when credit card debt topped $1 trillion.
Borrowers have yet to shun other forms of credit. Installment debt which includes automotive and student loan borrowing reached $1.85 trillion, far higher than the $1.56 trillion in balances recorded in 2008. The strength of the automotive market as well as a trend toward further education seems to have pushed balances higher. Many recently laid-off workers returned to colleges to train for future careers.