Consumer Credit In U.S. Increases For First Time In A Year……
Posted By thestatedtruth.com on March 5, 2010
By Vincent Del Giudice
March 5 (Bloomberg) — Borrowing by U.S. consumers unexpectedly rose in January for the first time in a year, led by auto loans and indicating Americans are gaining confidence in the economy.
Consumer credit increased $5 billion, or 2.4 percent at an annual rate, the Federal Reserve said today in Washington. Borrowing dropped $4.6 billion in December, more than first estimated. The figures track credit card debt and non-revolving loans, including those for automobile purchases.
The worst recession since World War II probably ended last year as factories boosted production and government spending programs took hold. The recovery may get a bigger lift from consumer purchases that account for about 70 percent of the economy when companies begin to hire.
“Consumers are relying more on credit and this is a sign that the economy may well have hit bottom and that they are starting to spend again, Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. An uptick in credit bodes well for the economic outlook this year.
The economy lost 36,000 jobs in February, less than anticipated, after a decline of 26,000 a month earlier even as snowstorms in parts of the nation forced some employers to temporarily close, Labor Department figures showed earlier today. The unemployment rate held at 9.7 percent.
Economists had forecast consumer credit would drop by $4.5 billion in January after a previously reported $1.7 billion decrease in December, according to the median of 33 estimates in a Bloomberg News survey. Projections ranged from a decrease of $12.3 billion to an increase of $2.4 billion.
The January gain in credit was the biggest since July 2008.
Revolving debt, such as credit cards, fell by $1.7 billion in January, according to the Fed’s statistics. Revolving credit has fallen 16 straight months, the longest series of declines since the Fed began keeping those records in 1968. The January drop was the smallest since July.
Non-revolving debt, including automobile and mobile-home loans, rose by $6.6 billion after a $4.9 billion gain. The Fed’s report doesn’t cover borrowing secured by real estate.
Auto sales in the U.S. cooled in January to a seasonally adjusted annual rate of 10.8 million, according to industry statistics. The pace slowed in February to 10.36 million.
Consumer spending during the final three months of last year rose at a 1.7 percent annual rate following an increase of 2.8 percent in the third quarter, Commerce Department figures showed on Feb. 26. Spending contributed to economic growth of 5.9 percent at annual rate, the best performance in more than six years.
Last Updated: March 5, 2010 15:00 EST
http://www.bloomberg.com/apps/news?pid=20601087&sid=aOKCjAUb7a5Y&pos=1
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