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    US Consumers Drive to School, Leave the Credit Card at Home

     

    American consumer borrowing increased in February propelled by the largest rise in non-revolving debt in more than three years.

    Overall consumer credit rose by $15.5 billion dollars following January's $10.8 billion increase, according to the Federal Reserve in Washington, D.C. today. The median forecast from the Bloomberg survey of economists was for a $12.5 gain.

    Non-revolving debt, loans with a fixed term and payment, typically student or automobile loans jumped $7.394 billion from $11.799 billion to $ 19.2 billion.  This offset a drop in revolving or non-term debt. 

    Revolving debt, usually credit cards with a minimum but no fixed monthly payment, fell $3.678 billion in the month as consumers used some of the saving from lower gasoline prices to pay down their outstanding credit cards bills. These loans had dropped $1.002 billion in January.

    The Federal Reserve report does not include mortgages or loans backed by real estate such as home equity credit lines. 

    Consumers clearly remain reluctant to spend or depend on their credit cards for purchases, retail sales have declined for three straight months.

    Despite the best string of monthly job creation figures in almost twenty years, stagnant wages, considerable remaining underemployment and the lowest labor force participation rate in a generation seem to have kept Americans in an uncommonly restive mood and out of the stores and malls.

    Joseph Trevisani

    Chief Market Strategist

    WorldWideMarkets Online Trading

    Charts: Bloomberg

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