Consumer credit increased by $5 billion or 2.4% as reported by the Federal Reserve on Friday, March 5th. This is the largest increase since July 2008. The stock market has increased for the sixth day in a row, Treasury’s fell, thereby increasing the yield. The unemployment figures that were released on the 5th were ugly, but positive. The country only lost 36,000 jobs, which is down from some anticipated estimates of 60,000. This is not great news, but Wall Street saw it as a positive sign. When a negative is smaller than anticipated that is a positive.
Credit card debt fell by $1.7 billion, which is the 16th straight month of declines—the longest on record. Automobile loans, home loans and other non-revolving debt increased by $6.6 billion. Consumer spending rose by 1.7% in the fourth quarter of 2009 and retail sales climbed 4.1%, which is the sixth straight gain and the biggest in 27 months.
If the consumer can continue to feel confident in their situation then spending will continue. This is an important statistic because 70% of the U.S. economy is comprised of consumer spending. So many positive signs are very exciting. If we can get the banks to begin making small business loans, sustain consumer confidence, monitor interest rates to fight off inflation without stifling growth, employers will begin employing, the economy will continue to grow and we can begin to study the bad dream of the previous two years with the hopes of not reliving it.
