Credit card debt increase by consumers
The consumers in US have increased their credit card debt in the month of March and this is the second time ever since the recession and these offers some hope that consumer spending patterns could help in boosting the economy and this may help in the recovery of the economy.
On Friday, in its monthly report on borrowing, the Federal Reserve has also stated that the overall consumer outstanding credit has risen from $6.02 billion to $2.426 trillion. This increase has been 6th in a row and has been bigger than expected. The economists who were surveyed by Dow Jones had forecast a rise of about $4.8 billion in consumer debt during the month of March.
All this news came amongst mixed signals with regard to the strength of the US economy. For example, the government data on Friday stated that the payrolls in the private sector had grown the most since five years and still the same report also projected that the jobless rate had risen to 9.0%.
The Institute for Supply Management stated on Wednesday that the US service sector activity had slowed down in April to its weakest since the previous summer.
According to a report this week in April, the sales in the chain-stores were strong where Costco Wholesale Corp had posted a 12% increase in sales despite being shut for Easter.
Costco operates gas stations at the sites and the higher cost in fuel contributed to the increase.
Since Americans have to pay more at the pump, they are cutting down on their spending elsewhere. During the first 3 months of 2011, the economy had braked sharply and this was partly due to reduced consumer spending.
The data on Friday by the Fed had showed revolving credit that is basically credit-card debt had risen from $1.95 billion to $796.10 billion in March. The revolving credit had only gone up a couple of times in the last 31 months which is twice since September 2008. This was when there was a flare-up in the financial crisis which led to consumers paying down their debts and lenders had also written off their overdue balances.
The Fed stated that non-revolving credit had climbed up from $4.07 billion to $1.629 trillion. Even loans for tuition, cars, mobile homes as well as the other things came under this category.
However, the consumer credit report does not include the numbers on real estate secured loans or home mortgage loans.
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