Thursday, December 8, 2011

Americans Are Borrowing Again

A couple of weeks ago, we talked about how American indebtedness had been growing as a result of increases in mortgages, despite the fact that consumer credit hadn't kept pace. But now we have news that Americans have started borrowing for consumer items as well. Consumer borrowing increased by $7.65 billion in October, reaching a total of $2.46 trillion, the highest it's been since October 2009.

Revolving debt, which is mostly credit cards, increased by $366.2 million in October. Non-revolving debt, which includes car loans increased by $7.28 billion. The driving force behind this was car loans; auto sales just had their best month since August 2009.

The other side of increased borrowing, of course, is that people are saving less. In the third quarter of 2011, the savings rate fell to 3.8 percent, the lowest it's been since the recession started at the end of 2007. While saving is always a good idea, given the state of our economy, the increased indebtedness might be a little more helpful right now.

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