Consumer credit accelerates again as credit-card debt tops $1 trillion
MsMorrisine
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By Greg Robb , MarketWatch
Total consumer credit up $15.2 billion vs. $10.8 billion gain in prior month
The amount of credit-card debt held by U.S. consumers increased in February after they took a breather in the prior month, pushing use of plastic above $1 trillion , according to a new report released Friday.
Total consumer credit increased $15.2 billion in February to a seasonally adjusted $3.79 trillion , posting an annual growth rate of 4.8%, the Federal Reserve reported Friday (https://www.federalreserve.gov/releases/g19/current/default.htm).
The increase in February consumer credit was in line with economists' estimates compiled by Econoday.
The pace of consumer credit in February is a pickup from a $10.8 billion gain in January, originally reported as a slim $8.8 billion increase. The January gain in consumer credit is still the slowest pace since April 2013 .
Revolving credit, which includes credit cards, increased at an annual rate of 3.5% in February to $1 trillion , the Fed report showed. This completely reversed a 3.2% drop in January, which was the first monthly decline in credit-card debt since November 2013 .
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Analysts said the decline in January wasn't unheard of as consumers often seek to quickly pay down their holiday borrowing.
Nonrevolving credit, such as loans for education and cars, increased 5.3% in February to $2.79 trillion , down only slightly from a 5.9% gain in the prior month.
In an interview with MarketWatch late last month, Dallas Fed President Rob Kaplan said consumers are in better shape than any time since the 2008 financial crisis.
See: Fed's Kaplan sees risk Washington could derail the expansion (http://www.marketwatch.com/story/feds-kaplan-sees-risk-washington-could-derail-the-expansion-2017-03-30)
Brian Bethune , economics professor at Tufts University , agreed with Kaplan, but said consumers were still being conservative in their spending habits with the memory of the last recession still fresh in their minds.
Consumer spending makes up about 70% of gross domestic product.
- Greg Robb ; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
04-07-17 1543ET
Comments
That is an average of $3,125 for every man, woman, and child. Since 5 yr olds do not carry credit card debt, we are probably closer to an average of around $4,000 worth of credit card debt per adult in this country. Im happy to state that I have contributed exactly $0 to those numbers.
I don't get how people can have so much debt. The only debt that you should really have is a mortgage if you are that far in life, a student loan, or maybe a car loan. Other then that, there is no need to be in debt.
Edit: I do realize there are some people whose circumstances are out of their control and they have no choice but to go into debt. Such as a medical bill. Most of us though should not be in debt unless it's those three things.
Just my opinion
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debt is the root of all problems economic. Promised pensions, auto loans and student loans will lead the way.
Que the "debt is a good thing" believers.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I think some debt is fine as long as you have the means to pay it off as fast as possible but there is no need to have excessive debt.
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debt is a liability. It is a claim against your current savings or your future earnings. What was once a necessary evil (but sensible approach) to a big ticket purchase (i.e. a home or capital investment) has become a crutch (with an added cost) for those who aren't disciplined enough to save. The only good debt is "convenience" debt that gets paid with no interest (i.e paying credit card in full each month).
Consumer debt in particular reminds me of the the bullion pre-seller who eventually gets caught with his pants down. One cannot become over extended if one does not extend himself.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
At least one fellow on another forum has chosen to invest in the stock market over an acceleration of retiring his large student debt obligation. Glad that the tax payers subsidized him.
I've been debt free since 2005 with the exception of my mortgage. I buried myself pretty badly in credit card debt in the late 90s. Lots of sleepless nights trying to make ends meet. I swore never to repeat that nightmare...and I've kept my word. Life's too short to stress over money.
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I use a cc but pay off the balance each month. Why would I use cash when I can get free fishing and hunting gear with points from my Cabelas card.
With rates as low as they are, folks are fools to not take debt and assume assets. What a gift the FED has given us.
Cabelas, my favorite place.
Knowledge is the enemy of fear
It's his choice. And who knows if it is subsidized via tax dollars?
And he has a job and is paying it off. I see no room to grumble here.
If he was living in his mom's basement, buying coins, and eating her food, then maybe....does not seem to be the case
It's been reported that the households that carry credit card debt are averaging over $10k each. 100 million households at $10k/each = $1 trillion. There are roughly 127 million households in the U.S.
Cabellas is another one of those chains like bass pro shop that wouldn't survive without the low or no tax deals that corrupt politicians saddle taxpayers with.
That isn't even close to true.
http://www.nasdaq.com/symbol/cab/financials?query=income-statement
2016: Earnings before taxes--$247,600,000 taxes--$100,663,000 rate--40.66%
2015: Earnings before taxes--$294,627,000 taxes-$105,297,000 rate--35.74%
2014: Earnings before taxes--$318,477,000 taxes--$116,762,000 rate--36.66%
If it is not govt g'teed than you are correct.
...and a ditty for the digital peanut gallery.
Unless you are upside down on your mortgage, I do not consider it debt at all. So long as the asset is currently valued at MORE than the outstanding principal, then there is no "debt", only an obligation. In an extreme example, lets say you still owe $175,000 on your home that is currently valued at $550,000. Would you be in debt on that mortgage for 175K, or would you have an asset worth 375K? I realize that by technicality, a mortgage is a form of debt.....but I strongly disagree with that philosophy. Another example.....when I had just 2 payments left on my 2012 Impreza, was I really in debt for $600, or did I actually have an asset of $10,400 ($11,000 wholesale value - $600 owed)?
What about a mortgage of $500,000 on a house currently valued at $550,000? Clearly as we have seen in the recent past, that is a potential disaster. Especially if the $550,000 house was valued at $300,000 three or four years earlier.
Managed debt is fine as long as the potential for a market turnaround is considered. With each dip and manufactured recovery of the housing and equities markets, the players become emboldened, perhaps to a dangerous level.
I'm talking about the state and local property tax sweetheart deals not income tax. When they want to locate a store they sucker the locals into giving them waivers or rebates of property tax. The existing stores that have to compete with them don't get to not pay taxes so cabelas can undercut them on prices , force them out then jack up prices when the competition is gone.
It's the old "walmart" method that crushed so many small businesses
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That's a pretty bold statement to make for someone hiding behind an alt
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And the skies are sunny...
It's easy to spend...
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One has not heard much about the massive oil production loans that went south.
http://www.cnbc.com/2017/04/10/the-us-college-debt-bubble-is-becoming-dangerous.html
I paid for myself through college and some of those funds came from student loans. I chose to go to a school that gave me a good financial package, but I still had about $20,000 in loans coming out of school (2010).
That slowed me from buying a house, from still buying a new(er) used car and getting married sooner. I think that is similar to a lot of people between the ages of 20-30 right now and it is definitely affecting the economy.
I have no idea what we can do to fix it, but BOTH schools and students have responsibilities in this. Students need to know what they're getting themselves into and ask themselves why they're getting a degree (women's studies or philosophy) isn't going to cut it when they look for a job and have 100,000 in debt. Schools also need to control costs and get rid of much of the BS administrators.and actually provide a benefit to students.
The millennial generation outnumbers the baby boomer generation and as a generation, millenials are way behind in financial independence compared to where boomers were when they were in their 20's.
I think that this could be a LONG term drag on the economy as many young graduates are in forbearance/default or on a income based repayment schedule. While those options can help delay the pain, interest is still accruing and making the problem even bigger over the long term and many graduates don't even know that!!!
This has an obvious impact on the economy due to less spending by millenials and stifled growth going forward for them. Everyone needs to smarten up, live within their means and be practical.
"""The millennial generation outnumbers the baby boomer generation and as a generation, millenials are way behind in financial independence compared to where boomers were when they were in their 20's."""
Higher education was relatively cheap in the 1970's. I covered most of my tuition at a highly rated business school from a $3.75 hr. job. Perhaps the $5,000,000 basketball coaches are a problem. More likely though the paying students are covering the cost of the indigent.
Lol, no way, worth every penny n more, they should cut professor and teacher pay to minimum wage, since all they do is repeat what is already written or what they have memorized...
Local school just hired a new president at a tad under a million bucks. Said the money isn't important. Fine, let him work for half of that.
School has also implemented a $100 athletic fee for every student.
Reality is most 4 year degrees could be completed in two. Cut out the fluff courses and concentrate on the core. Debt would be substantially reduced and the young Albert Schweitzer's would enter the workforce a year sooner.
Thats not a bug its a feature. It's just another grift . The higher education industry got jealous over the fleecing the so called "Healthcare system" has been perpetrating , they wanted a piece of the action.
It's small time stuff though compared to the scale of payments flowing from the government to the Ivy League schools. There are Ivy league schools that siphon more money from the Fed's purse than entire states
""" The higher education industry got jealous over the fleecing the so called "Healthcare system" has been perpetrating , they wanted a piece of the action."""
...and it gets extra interesting when the school runs the dominant medical center.
"The FED: the gift that keeps on giving."
Well, those here that warned of the debt problem have been proven correct. Current crisis would be much less of a financial crisis if consumers, businesses and corporations, had saved instead of borrowed. Living paycheck to paycheck and month to month has created a nightmare for those suffering a temporary loss of income.
Those crazy stock buybacks (that a few here warned about) that fueled the stock indices and increased management bonuses ate all the cash many public companies had on hand. The shares they bought back are worth up to 50% less than what they paid and they suddenly have no cash to fall back on. They, along with consumers who spent (mostly with credit) are now lined up at the taxpayer trough. Rainy days require an umbrella, one that you already had.
Kudos to those that did see this coming. Sorry you have to foot the bill for those who didn't.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Does anyone know where the filter for sanctimony is on this forum?
The purpose of the post is to provide vindication for those that were ridiculed for sharing their "absurd" warning concerning a debt problem and a stock buyback problem. And now that we realize they were correct, you wish to attempt to ridicule them further? Were you one of those proven wrong? LOL
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I'm with you on the display of corporate irresponsibility with their tax cut windfall, but I'm not a debt scold.
My debt is my business. I mind them both the same.
excessive debt has prevented the suddenly unemployed from having savings to fall back on. Applies to small businesses and corporations as well. Governments have no problem, they have printing presses.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
"They" don't have to use a printing press anymore. Just enter the funds via the keyboard.
I use credit cards for rewards never paid a penny of interest in my life. glad I don't have to handle cash now, with everything that's going on
Yes sir. The Fed's balance sheet come April of '21 might exceed $15 trillion in new money never to be repaid. We're now about $6 trillion with the door being blown through $10 trillion this summer.
Good thing that isn't public debt that must have interest paid on it or ever be repaid. We're going to be staring at $30 trillion in National Debt very soon too.
We'll buy off another downturn this time. Next time?
Gov.com loves people being in debt - much easier for social engineering that way. "Here is a loan. Personal loans MUST be paid back. Government loans, not so much."
I knew it would happen.
Yes. Many of us have expressed their disdain of stock buybacks.
Knowledge is the enemy of fear
And at the same time ignored the debt problem which turns out was worse than the buyback problem.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Debt, if used wisely, can build empires and many people and companies have done just that. Others, well, not so much. The problem is socialization of the consequences.
Knowledge is the enemy of fear
No, the problem is a lack of responsibility when accumulating it.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
There will only be a debt problem if the people of the world lose faith in our country and its values.
Our economy, and the constitutional institutions backing it up will survive long after we're gone.
We may be the best looking horse in the glue factory, but the lessons about leadership that we're learning these days will help us to keep it that way for a long time.
Feds are oiling up the printing presses. They ought to be converting to water cooling.
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Just how in the name of (insert your phrase here) will the debts of credit card,student loans,new car loans, ever realistically be repaid?
The FED will buy the debt.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Just borrow to oblivion then file bankruptcy, you can even do it 5,6,7 times if they are ignorant enough to keep lending you $$$. Don't worry maybe someday you can even be our leader. Happy holidays!
The whole worlds off its rocker, buy Gold™.
Credit cards broke us once due to a medical emergency. Never again. I still get offers and it's like didn't I forget to pay you guys back 50 grand not along ago? And you wanna do it again?