Holiday Season Sees A Surge In Credit Card Borrowing
Americans continue to borrow in order to pay for expenses during the holiday season and this has been indicated by the US credit card debt that has posted a solid increase for the second time in a row in December. The level of consumer credit has increased and the outstanding has gone from $19.31 billion to a whopping $2.498 trillion, according to the available data from the Fed Reserve. When Dow Jones Newswires had surveyed the economists, they had only forecast an increase of $7.5 billion.
There was an increase in revolving credit that is also inclusive of credit card debt. In the month of December, it had increased by $2.76 billion to $800.98 billion. In the month of November, the revolving credit had risen to $5.58 billion, which would be the biggest increase, since March 2008.
There has been an increase in non-revolving credit and it has risen by $16.55 billion to $1.697 trillion. This is an increase following a huge surge in November, and has been the biggest since November 2001. It is being driven by the fed student loans, and has been steadily increasing since the last one year. This is a sign to indicate that the high unemployment rates in the US are driving people back to schools.
However, the consumer credit report does not include real-estate secured loans or home mortgages. The fed data is an important tool that will help give a better insight into consumer behavior. It is the consumer spending that helps in giving the economy a thrust.
After a long period of recession, the economy is slowly recovering. The recession had come to an end sometime in mid-2009. There was a slowdown in growth just last year, but it managed to pick up sometime in the later part of 2011. The growth is likely to be moderate during the beginning of this year.
Consumer spending has been restrained due to the prevailing unemployment rates as well as falling housing prices. According to reports from the Labor Department, job openings had risen in the month of December. Even the economists had stated that this was in tune with the underlying trend; where the job openings are expected see a bigger rise when compared to hiring. Cooper Howes who is the analyst at Barclays Capital states that this suggests just one thing – the mismatched skills are continuing to create a friction in the job market.