Consumer borrowing rose unexpectedly in January

AP ^ | Friday March 6, 2009, 3:36 pm EST | unexpectedly Martin Crutsinger,

[BenLurkin]

Consumer borrowing rose unexpectedly in January after three months of declines.

The Federal Reserve said Friday that borrowing increased at an annual rate of $1.76 billion in the first month of the year. Economists expected borrowing to decline at a rate of $5 billion.

Still, the small rise in January is unlikely to shake economists' views that borrowing will remain weak this year as consumers tighten their belts in the face of massive layoffs and the recession. Consumer spending accounts for about 70 percent of U.S. economic activity.

The small increase came mainly from the category that includes credit cards, which rose at a 1.2 percent rate in January after dropping 9.5 percent in December.

The category that covers auto loans also showed a small increase of 0.6 percent after a tiny rise of 0.1 percent in December.

Consumer borrowing fell at an annual rate of $7.48 billion in December, which followed an $9.13 billion drop in November. The December figure was slightly larger than previously reported while the November number was smaller.

But the economy, especially the labor market, appeared to darken last month. The government reported Friday that the unemployment rate surged to a 25-year high of 8.1 percent in February as employers slashed another 651,000 jobs. Since the recession began in December 2007, the economy has lost a net total of 4.4 million jobs, with more than half coming in the past four months.

The government reported Monday that the personal savings rate jumped to 5 percent in January, the highest level since 1995.

[DonaldC]

Sooner or later, the economy will level out despite Obama.. imho

[Slapshot68]

“The small increase came mainly from the category that includes credit cards, which rose at a 1.2 percent rate in January after dropping 9.5 percent in December.”

Not surprising. With more people out of work, people are resorting to using their cards to replace their incomes.

[griswold3]

Consumers need to take this opportunity to deleverage.

[BenLurkin]

It would find its footing a lot sooner if he'd shut up and sit on his hands.

Or take a carton of cigarettes and his kids out to the swing set and just relax for a month.

[Moonman62]

Consumer spending accounts for about 70 percent of U.S. economic activity.

And most consumers get their money from jobs that come from the supply side of the economy, which politicians always ignore.

[colorado tanker]

Sooner or later, the economy will level out despite Obama..

The key word being despite.

[fightinJAG]

Duh. We were just in a conference call with our financial advisor today and he said, basically, the world has changed; we’ve never done this before, but we’re telling people to get a loan, let a little more float on your credit cards if it means not having to withdraw from your retirement account right now; even paying interest on a money will cost you less than cashing in your investments right now.

This is a bad sign, not a good sign.

[Unlikely Hero]

Word, and they are going on a binge before their limit gets slashed and/or they decide to default

[SouthTexas]

Why not if you don’t have to pay it back.