Consumer Credit Shows Another Sharp Decline
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In an indication that consumers are not ready to spend freely during the economic recovery from a recession that forced Americans toward frugality, shoppers in the U.S. put plastic away as credit card usage slipped in February.
The Federal Reserve said Wednesday that consumer-credit outstanding declined to a seasonally adjusted rate of 5.6 percent, dipping $11.5 billion to $2.45 trillion in February, and marked the 12th time in 13 months that borrowing by consumers fell in the U.S.
Economists had predicted a drop of $1 billion in consumer credit in February, as the January reading was revised up significantly from a rise of 2.4 percent to 5.2 percent or $10.6 billion.
The consumer-credit report is a closely watched figure as spending by households makes up 70 percent of the gross domestic product.
The high unemployment rate has held the spending of consumers down amid the sluggish economic recovery, but as the job market shows glimmers of hope spending could improve. Last week, the Labor department reported that 162,000 nonfarm payroll jobs were created in last month, which was the biggest gain in three years.
Credit-card use slipped 13.1 percent or $9.44 billion in February to $858.15 billion. In January, credit-card use grew 2.1 percent, revised up from a previously reported 2.3 percent drop for the first month of 2010.
The recovery is still slow going as the Federal Reserve Chairman stated Wednesday that the economy is growing again, but threats still remain.
"We are far from being out of the woods," he said. "Many Americans are still grappling with unemployment or foreclosure or both."
The Federal Reserve said Wednesday that consumer-credit outstanding declined to a seasonally adjusted rate of 5.6 percent, dipping $11.5 billion to $2.45 trillion in February, and marked the 12th time in 13 months that borrowing by consumers fell in the U.S.
Economists had predicted a drop of $1 billion in consumer credit in February, as the January reading was revised up significantly from a rise of 2.4 percent to 5.2 percent or $10.6 billion.
The consumer-credit report is a closely watched figure as spending by households makes up 70 percent of the gross domestic product.
The high unemployment rate has held the spending of consumers down amid the sluggish economic recovery, but as the job market shows glimmers of hope spending could improve. Last week, the Labor department reported that 162,000 nonfarm payroll jobs were created in last month, which was the biggest gain in three years.
Credit-card use slipped 13.1 percent or $9.44 billion in February to $858.15 billion. In January, credit-card use grew 2.1 percent, revised up from a previously reported 2.3 percent drop for the first month of 2010.
The recovery is still slow going as the Federal Reserve Chairman stated Wednesday that the economy is growing again, but threats still remain.
"We are far from being out of the woods," he said. "Many Americans are still grappling with unemployment or foreclosure or both."
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