U.S. Consumer Debt Increases $15.3 Billion, More Than Economists Forecast

[marmar]

from Bloomberg:



U.S. Consumer Debt Rises More Than Forecast in March (Update2)

By Vincent Del Giudice

May 7 (Bloomberg) -- U.S. consumer borrowing jumped more than double the amount economists forecast in March, indicating a slowing economy is forcing Americans to accumulate credit-card and other forms of debt.

Consumer credit increased by $15.3 billion for the month to $2.56 trillion, the biggest monthly rise since November, the Federal Reserve said today in Washington. In February, credit rose by $6.5 billion, previously reported as an increase of $5.2 billion. The Fed's report doesn't cover borrowing secured by real estate, such as home-equity loans.

Consumers are turning to credit cards after banks tightened standards for home-equity loans and other borrowing. The March figures brought U.S. consumer borrowing in the first quarter to $34 billion, the most since the first three months of 2001, when the economy entered its last official recession.

``Consumers are strapped as incomes are not keeping up with inflation and this is leading them to rely increasingly on credit to see them through the worst housing downturn since the Great Depression,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York. ``The days of extracting cash from one's home to spend on goods and services are long gone.''

Economists forecast an increase of $6 billion in consumer credit for March, according to the median of 34 estimates in a survey conducted by Bloomberg News.

By category, revolving debt such as credit cards rose $6.3 billion during March and non-revolving debt, including auto loans, increased $9 billion for the month, according to the Fed's statistics.

Household Spending

Total borrowing, a key element of consumer spending, increased at a 7.2 percent annual rate in March after rising at a 3.1 percent pace during February, the Fed said.

Household spending grew at the slowest pace since the 2001 recession in the first quarter, according to Commerce Department statistics. Consumer spending accounts for about two-thirds of economic growth. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aSN4AbFYIoCc&refer=home

[Frustratedlady]

1. I wonder how much of that was used to pay the IRS?

Property taxes were also due about that time for many.

[Warpy]

2. It's hard work to predict what the simple folk will do

when you're separated from the details of what they confront on a daily basis by staff.

These oracles of finance have people to gas the car, do the laundry, shop for food and cook it for them. While they might notice that the household budget has to be increased almost monthly, it's such a tiny part of their overall expenses that they completely miss the kind of effect it has on people who earn less than a twentieth of what they take home.

This is the endgame. People will amass debt until servicing that debt every month eats up the whole paycheck and then the system will simply collapse completely.

[Sherman A1]

3. Exactly

and I predict by the end of the Summer, things will be coming home to roost. The simple folk are stretched and it's getting tighter and tighter.