The Federal Reserve Board found that U.S. consumer credit was up 10.2 percent (at the annual rate) in March. Overall debt levels equal $2.54 trillion, up 7.7 percent in the first quarter. Both revolving and nonrevolving debt increased significantly, up 7.8 percent and 11.3 percent, respectively. Revolving credit accounts now total $803.6 billion, which is where it stood at the end of 2011 after declining in January and February.
Nonrevolving loans, on the other hand, continue to grow steadily and now total $1.74 trillion. The largest increases of late have come from student loan balances, with $460.2 billion outstanding. This figure averaged $355.2 billion in the first quarter of 2011, illustrating how quickly it has grown. The largest holder of nonrevolving loans, however, continues to be commercial banks, with $499.4 billion in loans outstanding.
These numbers reinforce the notion that consumers continue to spend, even if that means that they are going further in debt to do so. Yes, personal spending slowed somewhat in March, as we noted last week. But, Americans continued to grow their purchases, even as sentiment surveys show increased anxieties to higher energy costs and other challenges.
Consumer spending has risen 4 percent in the past year, and the U.S. savings rate has dipped to 3.8 percent. The fact that revolving debt lines rose – after declining earlier this year – shows that they are less cautious and more willing to use their credit cards to finance their purchases.