This can only happen in America.. Surge in Consumer Debt is considered good thing.. my conventional wisdom tells me to reduce debt and stay debt free as soon as possible.. However, here it is considered a good news.. actually it is considered, kind of Consumer's Vote of Confidence in Economy :-)
This was partly fueled by higher Car Sales (i.e. higher Car loans..) and Holiday sales on Credit Card.. In my view Consumers were holding too much for too long and I guess, holiday spirit (don't ask me) made them these stupid decisions of higher spending on their credit cards.. It is not so good news as per me.. but again.. I am not an economist.. I am simply a common man..
Here is the detailed news from our local mercury news..
Consumer debt surges, boding well for economy
By Martin Crutsinger
Associated Press
WASHINGTON — Americans are feeling confident enough in the economy to go back to a time-honored tradition — taking on a little extra debt.Consumer borrowing surged in November by $20.4 billion, the Federal Reserve said Monday. It was the third straight increase and the largest monthly gain in a decade.
The jump in borrowing was largely because people took out more loans to buy cars and swiped their credit cards frequently to purchase holiday gifts. In November, total consumer borrowing rose to a seasonally adjusted $2.48 trillion — nearly at pre-recession levels and up from a post-recession low of $2.39 trillion in September 2010.
Since then, consumers have increased their borrowing in 13 of the past 14 months. Americans are taking on more debt after seeing the unemployment rate drop and the economy improve, albeit modestly. Many are also leaning on their credit cards and loans to make up for wages that haven’t kept pace with inflation this year. Holiday sales were solid in November, and the U.S. auto industry had its two best sales months for the year in November and December. The Fed’s credit report appeared to reflect those sales. The category that measures credit card debt rose in November by $5.6 billion, the most since March 2008. The gauge that tracks auto loans and student loans increased $14.8 billion, nearly matching July’s gain that was the biggest since February 2005.
This was partly fueled by higher Car Sales (i.e. higher Car loans..) and Holiday sales on Credit Card.. In my view Consumers were holding too much for too long and I guess, holiday spirit (don't ask me) made them these stupid decisions of higher spending on their credit cards.. It is not so good news as per me.. but again.. I am not an economist.. I am simply a common man..
Here is the detailed news from our local mercury news..
Consumer debt surges, boding well for economy
By Martin Crutsinger
Associated Press
WASHINGTON — Americans are feeling confident enough in the economy to go back to a time-honored tradition — taking on a little extra debt.Consumer borrowing surged in November by $20.4 billion, the Federal Reserve said Monday. It was the third straight increase and the largest monthly gain in a decade.
The jump in borrowing was largely because people took out more loans to buy cars and swiped their credit cards frequently to purchase holiday gifts. In November, total consumer borrowing rose to a seasonally adjusted $2.48 trillion — nearly at pre-recession levels and up from a post-recession low of $2.39 trillion in September 2010.
Since then, consumers have increased their borrowing in 13 of the past 14 months. Americans are taking on more debt after seeing the unemployment rate drop and the economy improve, albeit modestly. Many are also leaning on their credit cards and loans to make up for wages that haven’t kept pace with inflation this year. Holiday sales were solid in November, and the U.S. auto industry had its two best sales months for the year in November and December. The Fed’s credit report appeared to reflect those sales. The category that measures credit card debt rose in November by $5.6 billion, the most since March 2008. The gauge that tracks auto loans and student loans increased $14.8 billion, nearly matching July’s gain that was the biggest since February 2005.
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