Americans are borrowing more, with consumer credit shooting up in March to an annual rate of 10.2 percent, the Federal Reserve reported last week. Total consumer borrowing amounted to $2.54 trillion for the month, representing a $21.36 billion gain over the previous month.
Revolving debt, such as credit card debt, amounted to $803.6 trillion in comparison to February’s $798.5 trillion, and grew by an annual rate of 7.8 percent. Non-revolving debt, such as student loans and car loans, totaled $1.738 trillion, in comparison to February’s $1.722 trillion, and grew by an annual rate of 11.3 percent for the month.
The question is whether or not the gains represented increased economic activity and confidence.
“The optimistic read is that consumers’ improved outlook on the economy and employment prospects led them to feel comfortable spending on credit, while a more downbeat interpretation is that credit is needed for consumers to keep up,” analysts at Nomura Global Economics remarked in a public statement regarding the Fed’s data.
In employment news, initial jobless claims for the week ending May 5 dipped to 367,000, a decrease of 1,000 from the previous week’s revised figure of 368,000, the Employment and Training Administration reported last week. The four-week moving average was 379,000, a decrease of 5,250 from the previous week’s revised average of 384,250.
The Administration also reported that the total number of unemployed workers covered by insurance during the week ending April 28 dropped to 3,229,000, a decrease of 61,000 from the preceding week’s revised level of 3,290,000. The four-week moving average was 3,290,000, a decrease of 10,500 from the preceding week’s revised average of 3,300,500.
In the Arizona Economy, the outlook is a bit more favorable. Employment gains in Arizona should continue at a pace of around 2.0% for now. Sales tax collections will improve moderately as the year progresses as will other government tax revenues.