Consumer borrowing increased 8.6% annually during the month of January, lifting total consumer borrowing to $2.536 trillion, within about $50 billion of the highest level in US history of $2.587 trillion in July 2008. There is some debate as to whether increasing consumer borrowing is a stimulant for the economy or an indicator of financial stress. After going through the numbers I believe the answer is quite clearly an indicator of financial stress.
The only major holders of debt to increase more than 2% annually were the federal government and savings institutions. Borrowing from the federal government increased 32% to $453 billion. The next biggest percentage increase came from the relatively small category of savings institutions with 5.6% to $55.4 billion. Student loan debt is captured in the federal government category. Both commercial banks and finance banks reported a sequential decline in borrowing and relatively flat annual growth. I believe these statistics illustrate that the average US consumer is under more financial strain, unable or less willing to pay for their children's schooling, and lending institutions remain wary of extending further credit.
No comments:
Post a Comment