Consumers borrowing more, CUs see debt drop
WASHINGTON (3/8/10)--American consumers increased their debt by $4.96 billion, or 2.4%, to $2.46 trillion during January, according to Federal Reserve data released Friday. It was the first increase in a year. Consumers borrowing from credit unions bucked that trend and dropped to $235.8 billion from December's $237.2 billion. January's credit outstanding at credit unions was the lowest since second quarter 2009.
The unexpected monthly gain in overall outstanding consumer credit more than reversed a revised $4.57 billion drop in borrowing during December. Driving the reversal was nonrevolving credit, which includes items like loans to buy new cars and boats.
Revolving credit, which includes credit cards, declined for a 16th consecutive month. Wall Street analysts surveyed by Reuters had forecast that January consumer credit would contract by $4.5 billion rather than rise (Reuters March 5).
The last time that overall consumer credit rose more strongly than in January was July 2008, when it jumped $7.29 billion before beginning a slide as a financial crisis swept through the U.S. economy.
January's nonrevolving credit rose by $6.62 billion on top of a $4.86 billion sprout in December. The Fed offered no explanation for the rise. So far during 2010, car sales have been soft. Like revolving credit, nonrevolving credit at credit unions dropped--to $200.9 billion from $201.7 billion in December.
Revolving credit decreased by $1.67 billion after a $9.43-billion plunge in December. The decline reflects consumers' wariness about their discretionary spending, the tightening of credit by banks, and banks' willingness to raise fees on credit card use, said Reuters.
Revolving credit at credit unions also declined, to $34.9 billion in January from December's $35.9 billion.
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