The Federal Reserve said Friday that consumers increased their total borrowing by $6 billion in March, the sixth consecutive monthly gain. Consumers borrowed more to finance car loans for the eighth straight month. And a category of borrowing that includes credit card use rose for only the second time since August 2008.
More frequent credit card purchases could be a sign that consumers are feeling more confident about the economy.
The 3 percent overall increase pushed consumer borrowing to a seasonally adjusted annual level of $2.43 trillion, still just 1.3 percent higher level than a nearly four-year low of $2.39 trillion hit in September.
Unfortunately, one month does not make a trend. Q1/2011 still averaged out at a -2.3 percent rate on a preliminary basis, despite the positive March reading. This indicator had previously turned positive for the month of December 2010, before again turning negative in January 2011.
As noted in the excerpt above, consumers’ installment borrowing (largely for autos) has been positive and strong for some time, although the March 2011 reading (3 percent annualized growth) was less than half the growth rate of January and February. This suggests that economic and inflationary concerns such as gas prices might be weighing on consumer willingness to borrow for major purchases.
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Click here to read the release from the Federal Reserve: http://www.federalreserve.gov/releases/g19/current/g19.htm
