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What to Learn From the Latest Credit Consumer Report

By Faye Mergel
Published: Sunday, November 10th, 2013

The recent government shutdowns left numerous questions unanswered to the public. This includes queries related to the retail sales, labor statistics, trade balance, business inventories, and health updates. Among all this list of big NOs, the credit consumer reports for the month of August from Federal Reserve surely give something to munch on for the time being.

According to the report, consumer borrowing increased to $13.6 billion in August with total $3 trillion, which is a record by any standards. This includes debt on the credit cards, student loans, and auto loans. Exemptions to this being real estate loans and mortgages. For the third successive time on a monthly basis, consumers seem to have reduced spending is on their credit cards as evident from this credit report. However, borrowing has increased on auto and student loans, which is an ongoing trend right from 2010 onwards.

Households looking to clean up the balance sheets related to their credit cards do well by cutting back on expenses related to these. This is especially true for families where the primary breadwinner is yet to receive a raise, have lost job, or get lower pays than before. This however bodes ill for broader economic scenario especially when the government is not showing any signs to increase its spending to balance the demand shortfalls.

One of the biggest new debt drivers is of course the student loan in the post 2009 recession scenario. Increased student debt signifies higher interest in college education in the recent times signifying in turn better prospects on the job situation. The sad part of this story is that new employment generation presently is nothing but a trickle and this is not good news for students are graduating or waiting to graduate. Some may argue that the unemployment rate among graduates is quite low when compared to others but these statistics include 25+, age group only.

Those lying below the 25, age bracket show elevated instances of unemployment. The average is 8.2% over the last year statistics. Another difficulty is that unemployment rates do not consider individuals who work on a part-time basis. What about the graduate students who are holding jobs that does not require use of their erstwhile field of education?

The overall picture placed forth by the August Federal credit report signifies that most consumers do not have the means to spend/ borrow sizeable amounts to help boost the economy.

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