It seems that despite a worrisome economy, Americans are spending at high levels more and more these days. So high in fact that total consumer loans raised by $7.4 billion this past September, according to the Federal Reserve`s most recent report.
This report documented that American`s are more often borrowing money for things like college or automobiles. These two types of purchases are ever increasingly popular as many Americans chose to take out loans to educate themselves to increase their competitive edge in the work force. This documents that Americans are growing more cautious of taking on debt through things like credit cards, however, as they are showing less usage of that. Those who have credit cards are decreasing the frequency of their usage as well. The use of credit cards to make purchases has dropped drastically by nearly 19% since September of 2008 at the absolute height of the fiscal crisis.
Not long ago several expert economists were concerned that the state of the economy put Americans at risk of falling back into another recession. But now the economy has shown some growth at an annual rate of 2.5 percent in the July through September period of time. Does this mean America might be on its way to more substantial fiscal recovery? Perhaps, but it’s too early to tell where our economic climate is headed right now.
Earlier this month the government stated that the jobless rate dropped to 9% in our country in October, from 9.1% where it had been stagnant for several months. This was because our country added approximately 80,000 new jobs. Despite signs of improvements, without more aggressive job increases and higher paying positions becoming available many American consumers may be have to cut back on their spending habits. This cut back on spending habits could slow down the economic growth of our nation. After all, nearly 70% of financial activity comes from American consumer spending. This recent Federal Reserve report does not include mortgages, home equity loans or any other loans tied to real estate investments. The Federal Reserve report solely covers student loans and automobile loans, two major buying areas for American consumers.
Perhaps the best thing to do is to remain optimistic. It`s also important that we educate our younger populations who are taking out credit cards about the proper management of their debt. Credit cards after all are a very important and useful tool towards Americans building things like credit and feeding the economy. We need to educate each other on basic fiscal survival skills. If our spending habits increase then we need to be responsible for the consequences. It`s about time we took it upon ourselves to help the economy recover slowly but surely.