Consumer Lending Slows
The Federal Reserve reported earlier in the week consumer borrowing rose at 2.4% in February, just half of the increase from January. The slowdown was not a surprise and reflected what investors already knew - that consumers are being more cautious in their spending.
Auto loans and other non-revolving credit was even more deeply affected. Those loans grew at .4% - barely a tenth of the 3.6% growth in January.
In contrast, credit card debt has increased an amazing 5.9%. This is thought to be a reaction to tougher borrowing standards for home equity loans brought on by the subprime lending crisis. Additionally, homes aren’t worth as much as they used to be for purposes of equity borrowing - states that had artificially high home values such as California, Florida and Nevada as a result of the housing mania of the past few years are deeply affected.
What does all of this mean? For one, the US is not making a dent in its borrowing despite recession woes - we’re just borrowing from different sources. Consumer credit debt for the US now sits at a whopping $2.539 trillion - yes, trillion.
What about you? Have you cut back on your spending? Have you slowed your borrowing? Or are you just borrowing from different sources?
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POSTED IN: Consumer Debt
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