Ahead Of The Bell: US Consumer Borrowing
WASHINGTON (AP) â¿¿ U.S. consumers have stepped up borrowing in recent months, mostly to attend school and buy cars. They have been more cautious about using their credit cards, a trend that likely continued in February as Americans adjusted to paying higher taxes.
Economists forecast that consumer borrowing rose $16 billion in February, according to a survey by FactSet. That would nearly match January's pace and push total borrowing to a record high.
The Federal Reserve will release the report at 3:00 p.m. Eastern time Friday.
In January, consumers increased their borrowing $16.2 billion from December to a seasonally adjusted record of $2.8 trillion.A category that covers student loans and auto loans grew by $16 billion following an $18.3 billion gain in December. But a measure of credit card debt grew only $106.1 million in January. The credit report doesn't separate auto loans from student loans. But according to quarterly data compiled by the Federal Reserve Bank of New York, student loan debt has been the biggest driver of borrowing since the recession ended in June 2009. It reached $966 billion in last year's fourth quarter, up $10 billion from the third quarter. Since the recession, consumers have grown leery of using plastic. Credit card debt remains 17.2 percent below the peak set in June 2008. Analysts believe consumers will stay cautious with their plastic this year, largely because of the tax increase. In January, Social Security taxes rose on nearly all Americans who draw a paycheck. The increase leaves a person earning $50,000 with about $1,000 less to spend in 2013. A household with two high-paid workers will have up to $4,500 less. Despite the increase, consumers have kept spending. In February, consumer spending rose 0.7 percent, the biggest gain in five months. Americans were able to spend more because their income jumped 1.1 percent.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV