Consumer borrowing was up $16.2 billion in Jan, according to economic experts surveyed by Bloomberg. This followed a December where revolving and non-revolving customer credit situations were up by $15.1 billion. Resource for this article:
Employment, cheaper financing drives customer borrowing craze
It is really good that more people are interested in credit since customer spending drives 70 percent of the economy, according to economist Terry Sheehan. Experts believe that the increase has come from things such as a higher employment rate and more stable house values. On top of that, financing is much cheaper for people to get, which is a huge driving factor.
“There’s been some repair to household balance sheets in the last few years,” said Sheehan. “Consumers certainly have a little more leeway in their borrowing, and with greater employment prospects we have certainly seen a greater ability to borrow.”
The Dow Jones Industrial Average increased to record amounts and the unemployment figures are at a six-year low, which are both good for the economy.
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Joblessness claims decreased to a five year low. In fact, it did the opposite of what financial experts were expecting in the week ending March 2, according to Bloomberg. Claims decreased to 340,000, which are way better than the 355,000 claims predicted by economists.
This definitely causes more people to feel comfortable and get more debt, including the $106 million boost in in credit card debt and other revolving debt in January. In December, there was an enormous decrease, so the increase was good. There was also an $18.3 billion increase in Dec. in other debt, such as home loans, auto loans and student loans. That sort of increase has not been seen since right after Sept 11 when good incentives were offered to get people purchasing again.
Federal school loans increased $25.9 billion in Jan, before seasonal adjustment.
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