They did it again! American consumerscelebrated the new year, not by borrowing more on their cards, butby paying down their holiday splurges. This pattern has become thenorm in the post-recession environment. And at $800.9 billionoutstandings, cardholders ended January 2012 almost exactly wherethey were in December – of 2010!
That’s not to say that consumers were not spending on their cards.Visa and MasterCard combined credit spending volumes continuedtheir healthy growth (over 3% for Q4 2011), but borrowing remainssluggish. On the other hand, January’s consumer revolving creditoutstandings were down an annualized -4.4% (preliminary).
As I have commented in previous blogs, this does not mean consumersare not borrowing. It’s just that the borrowing is focused on autosand student loans and not so much on the discretionary spendingthat usually happens on credit cards. Consumer installment credit(which contain these two categories) rose an annualized 14.7% inJanuary, nearly $21 billion.
So far, the consumer credit card behaviors formed in the depth ofthe recession have been persistent. Credit card industryoutstandings remain over 16% lower than their peak just over threeyears ago. While the decline has definitely bottomed out, there isno clear growth in card-based borrowing.
With spring on the way, consumers willingness to borrow couldrebound, riding a modest wave of new confidence in the economy.Then again, they may focus on the growing task of paying down allthose auto and student loans.