Fed: Consumers trim borrowing by $3.2B in May

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 Quote:
The Federal Reserve said Wednesday that consumer credit fell at an annual rate of 1.5 percent, or by $3.2 billion, from April. Economists expected a deeper cut of $9.5 billion. But the new figures still mark the latest move by consumers to curb borrowing, pay down debt and strengthen household budgets. Americans have been spending less and saving more to cope with the recession, which started in December 2007 and is the longest since World War II. The savings rate jumped to 6.9 percent in May, the highest since December 1993. The amount of money saved — $768.8 billion — was the most on records that started in January 1959, the government recently reported. Revised data released Wednesday showed consumers ratcheted back borrowing at a 7.8 percent pace in April, or by $16.5 billion. That was a bigger cut than first reported and the largest — in dollar terms — on records dating to 1943. The $15.6 billion drop in March was slightly less than previously reported, but the second largest tally ever.
 Quote:
In May, consumers' appetite for revolving credit, primarily credit cards, declined at a rate of 3.7 percent, or by $2.9 billion. That followed a a 11.1 percent annualized drop in April, or $8.7 billion. Demand for non-revolving credit used to finance cars, vacations, education and other things dipped at a 0.3 percent pace in May, or by $367 million. That came after consumers sliced such borrowing at a 5.9 percent pace in April, or $7.8 billion. Americans' net worth shrunk by $1.3 trillion in the first three months of this year due to declining stock and home values. Many are having trouble paying their bills on time. Consumer loan delinquencies hit a record-high in the first quarter due mainly to rising unemployment, the American Bankers Association said Tuesday.
http://www.google.com/hostednews/ap/article/ALeqM5g1RbLCbz_AJrpIhbI4fRRyuNF0EgD99AF8903
 
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 Quote:
Many are having trouble paying their bills on time. Consumer loan delinquencies hit a record-high in the first quarter due mainly to rising unemployment, the American Bankers Association said Tuesday.
 Quote:
The savings rate jumped to 6.9 percent in May, the highest since December 1993. The amount of money saved — $768.8 billion — was the most on records that started in January 1959, the government recently reported.
Alright - which one of you weasels is saving and not spending??
 
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That would be me. I just sold my Taco to get rid of car debt. Put thousands that I made on the deal in the bank, until a right used car comes along and I can pay cash for it.
 
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 Originally Posted By: Pablo
 Quote:
Many are having trouble paying their bills on time. Consumer loan delinquencies hit a record-high in the first quarter due mainly to rising unemployment, the American Bankers Association said Tuesday.
 Quote:
The savings rate jumped to 6.9 percent in May, the highest since December 1993. The amount of money saved — $768.8 billion — was the most on records that started in January 1959, the government recently reported.
Alright - which one of you weasels is saving and not spending??
Call me guilty!
 
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It's an upside-down economic behavior. Instead of saving during the good times and spending during the bad times, we seem to do the opposite. I'm sure there are economists coming up with theories about such behavior - some of them may even get a Nobel prize in the future.
 
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Im spending like their is no Tomorrow! I bought a house 2 weeks or so ago and am doing my best to stimulate the economy! Although the estimated national unemployment rate of 15% when (if) we hit bottom scares me. I am trying to fix up this home so that when we move in we are good to go for about 20-30 years.
 
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 Originally Posted By: CivicFan
It's an upside-down economic behavior. Instead of saving during the good times and spending during the bad times, we seem to do the opposite. I'm sure there are economists coming up with theories about such behavior - some of them may even get a Nobel prize in the future.
They theory is the Fed & poor monetary policy lead to this behavior. They create these cycles. We don't keep i/rates high enough to encourage savings. We borrow & spend, which is even worse. When you interfere with market forces, you often end up with painful, unintended consequences. Our economy has been over-engineered. We really need to re-think a lot of things but it's too late now. Until the system collapses on itself this is what we have to work with. You know it's really bad when Ford is giving people 0% for 72 months to consumers who are already buried in debt that live in a country with a government that is broke. If you have savings, now is a great time to spend. We have savings, but both of use have massive student loans. It's unfortunate you have to spend so much money on college. It's out of control.
 
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Most people's savings were in their house. Most have depleted their home equity ..and found that their house isn't worth anything anyway. Everyone's paycheck is in the economy 24/7/365. Unless you've physically taken paper currency and throw it in a bag, it's out there. 100% of it. Even our esteemed CEO's with up to 10X their earned income as "owned" income (deferred) have 100% of it in the economy.
 
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This just proves the theory that loan is there because businesses have no place to put their money and decided to loan it out. Now the businesses have problem shoring up cash, they are no longer lending. Consumer will just suck it up and live within there means if you regulates the money supply.
 

JHZR2

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It is also because the banks are pulling back credit, so the spendthrifts have not as much to play with.
 
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