Consumer credit rises for first time in a year

According to the report released on Friday by the Federal Reserve, consumer borrowing increased in January for the first time in a year. In contrast with the prediction of Briefing.com, which predicted a decline of $4.5 billion in January, total consumer borrowing rose to $2.456 trillion in January, a seasonally adjusted $5 billion. This news might be an indication that consumers are beginning to feel more confident and, therefore, are starting to spend more. Also, this news might mean that consumers simply cannot afford to pay their debt anymore. It is also reported that except for revolving credit which fell in January by a 2.3% annual rate, the trend of the increase in consumer borrowing is continuing; for example, nonrevolving credit like auto, personal and student loans rises a 5% annual rate in January.

In summary, it is hard to determine what the real endogenous reason for this phenomenon is. As time goes by, economists will draw a clearer conclusion.