Consumer debt spiked to $15.3 billion in March, more than twice the consensus figure of $6 billion, as consumers turned from home equity to credit cards to finance their shopping habits. The jump represents the largest monthly rise since November. It also serves as reminder that, at some point, consumers will run out of financing wells to drink from and, finally, be forced to rein in spending. Bloomberg:
Consumers are turning to credit cards after banks tightened standards for home-equity loans and other borrowing. The March figures brought U.S. consumer borrowing in the first quarter to $34 billion, the most since the first three months of 2001, when the economy entered its last official recession.
“Consumers are strapped as incomes are not keeping up with inflation and this is leading them to rely increasingly on credit to see them through the worst housing downturn since the Great Depression,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York. “The days of extracting cash from one’s home to spend on goods and services are long gone.”