Americans have been taking on more debt in May and are using their credit cards more for the second time in nearly three years. Kicking up borrowing as the economy begins to slump and hiring is slowing.
The Federal Reserve said Friday, that consumer borrowing has risen to $5.1 billion in April. That following a revised gain of $5.7 billion in April. Borrowing in the category that covers credit cards increased, and borrowing in the category for auto and student loans, also increased.
Borrowing is usually a sign of confidence in the economy because a consumer will tend to take on more debt when they feel wealthier. That in return boosts consumer spending and eventually gives businesses more faith to expand and hire.
BUT – we are seeing an increase in credit card debt. Credit card debt is a sign that people are falling on harder times.
The summary – the economy is slowing, it added only 18,000 jobs in June the slowest in nine months, the unemployment rate is 9.2 percent, which so far is the highest rate of the year. These factors plus the slumping housing market, fears of a fallout from the European debt crisis, all will weigh on the economy possibly for the rest of the year.
