Ahead of the Bell: Consumer Credit
05.07.08, 6:16 AM ET
WASHINGTON - Government data due out Wednesday is expected to show that the rate of consumer borrowing edged up in March as Americans racked up more debt on their credit cards.
The Federal Reserve releases its consumer credit report at 3 p.m. EDT. The market expects consumer borrowing for March rose by $6 billion, according to a consensus estimate of Wall Street economists surveyed by Thomson/IFR. That's up from $5.2 billion in February. However, economists' latest estimates for March ranged from $3 billion to $7.5 billion.
In March 2007, consumer borrowing increased by about $14.3 billion.
In the monthly report, the Fed measures revolving credit, primarily credit cards, and nonrevolving credit, used to finance cars, vacations and education, among other things. The measure does not include mortgages or other loans secured by real estate.
In February, consumer debt rose at an annual rate of 2.4 percent, down from a 4.9 percent growth rate in January. Total consumer debt stood at a record $2.54 trillion at the end of February.
Consumer borrowing slowed considerably in February because of weak demand for automobile loans and other types of nonrevolving credit. However, credit card debt rose at a 5.9 percent rate for the month as consumers put more of their purchases on their credit cards since banks have tightened lending standards for home equity loans.
The Commerce Department last week reported that consumer spending for March was up 0.4 percent, double what economists had forecast. But, once inflation was removed, spending inched up a much slower 0.1 percent.
Consumer spending is closely watched by Wall Street because it represents about 70 percent of U.S. gross domestic product, which measures the value of final goods and services produced.
The Labor Department also recently reported that consumer prices rose by 0.3 percent in March, after being unchanged in February, due to increases in energy and food costs.
News Source : http://www.forbes.com/ |
