Borrowing Slow Down
November 12, 2007
American consumers are borrowing less, and if the latest numbers are any indication, they are borrowing a lot less.
The recent report for the month of September 2007 says it all. Overall, consumer borrowing increased for that month by only 1.8 percent. That is the slowest pace in five months and much of that decrease was due to a slow down in credit card debt and car loans. This rate of 1.8 percent was only about half of what most economists estimated for the period.
According to the Federal Reserve, the breakdown is as follows: For revolving credit (and this includes credit card debt), the rate increased by only 4.4 percent. This category has not seen that slow a rate increase since last April. For non-revolving debt and loans, (this includes car loans) the increase was a mere 0.3 percent for the month of Sept. The last time the auto market saw this small an increase was in Oct of 2006.
One of the most interesting and powerful facts to come out of the report was that total consumer debt rose by $3.75 billion in September, to $2.48 trillion. This is a massive decrease from the gain of $15.41 billion which was reported in August 2007. Some analysts had expected much stronger numbers, somewhere in the neighborhood of $8.5 billion for September. They missed the mark on this one