Consumer borrowing rose for the sixth straight month in March, the Federal Reserve announced on Friday. Credit card debt, in particular, increased $1.9 billion in March, which was the second gain in four months. According to experts, the increase is being driven by more consumer confidence in the economy.
On the Rise
The increase in consumer spending correlates directly with an increase in spending from establishing auto loans and with purchases on credit cards. From January to February of 2011, consumer spending rose by $7.6 billion. The increase in spending from February to March was another $6 billion.
All in all, the increase in consumer spending points to an uptick in consumer confidence. In April, 244,000 jobs were added in the U.S vs market expectations of 185,000 jobs, according to Bloomberg.
As hiring picks up, consumers see a light at the end of the tunnel that is causing them to reach back into their pockets once again. In a Bloomberg News study of 37 economists, all predicted an upswing in consumer spending. The economists did not agree, however, on the size of the increase, with predictions ranging from $2 billion to $8 billion.
Credit Card Spending
Credit, both revolving and non-revolving showed substantial increases. Revolving credit, such as credit cards, rose by $1.9 billion while, non-revolving types of loans, such as auto loans, student loans and loans for mobile homes jumped by $4.1 billion for the month of March. The only data not tracked in any of the Federal Reserve’s reports is real estate loans, such as the mortgages for buying or refinancing a home.
Credit card companies, such as American Express and MasterCard, have reported higher earnings and profits for the first quarter, which matches that more consumers are pulling out their credit cards and charging once again.