"Altruistica": Seeking a return to full financial disclosure and regulatory oversight. A financial market analysis blog for "entertainment purposes" only by an experienced CFA seeking new hedge fund engagements for investment writing and analysis. The author has experience investing internationally, running a hedge fund, making angel investments, and helping launch five startup companies. Investors should do their own due diligence.

08 January 2007

Consumer Borrowing Posts Bigger-Than-Expected November Increase

Consumer Borrowing Jumps in November at MORE THAN TWICE the rate expected as credit card debt soared 12% pre-Christmas. And given the backloaded consumer spending as retailers cut prices, credit card debt rose also in December by at least 10%. Well, that is a pretty good explanation for the recession we are mired in today.

Uh, oh! Empty Wallet, Gotta Tell the Kids!

WASHINGTON (AP) -By Martin Crutsinger, AP Economics Writer- Consumer borrowing rebounded sharply in November, rising at the fastest clip since August. The Federal Reserve said Monday that borrowing rose at an annual rate of 6.2 percent in November, the biggest increase since a 6.8 percent rise in August. Borrowing had fallen at a 0.6 percent rate in October, which had been the biggest one-month decline in 14 years. Economists had expected a rebound in November, given that retail sales were strong during the month, but the amount of the increase was more than double what had been forecast.

The strength in November came from an 11.9 percent jump in the category that includes credit card debt. That was the fastest jump in the revolving debt category since last May and was far above the 4.2 percent rate of increase in October. The category of nonrevolving debt, which covers auto loans, rose at a 3 percent rate in November after having fallen at a 3.4 percent pace in October. All of the changes pushed consumer credit, which does not include home mortgages, up by $12.3 billion to a record high of $2.39 trillion at an annual rate. Economists had been forecasting a smaller rebound of around $5.5 billion.

"Analysts" are looking for a slowdown in the rapid pace of borrowing of the past two years as consumers start to feel less wealthy now that housing prices are no longer surging to record levels. The overall economy slowed in 2006 as consumers trimmed the growth in spending and the housing market was battered by slowing sales and reduced building activity.


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