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March's $15.3 Billion In Consumer Debt An Unexpected Surge

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The Associated Press

Published: May 8, 2008

WASHINGTON - Consumer borrowing rose in March at the fastest pace in four months, more than double the increase of the previous month.

The Federal Reserve reported Wednesday that consumers increased their borrowing at an annual rate of 7.2 percent, compared with a 3.1 percent rate of increase in February.

The gain was much larger than economists expected and reflected strong borrowing on credit cards and also in the category that includes auto loans.

The increase in consumer debt totaled $15.3 billion at an annual rate in March, much bigger than the $6 billion expected by economists. The bigger gain was seen as a sign that the weaker economy was forcing consumers to increase their borrowing to support spending.

Borrowing on credit cards was up at an annual rate of 7.9 percent, compared with a 5 percent gain in February, and borrowing in the category that includes auto loans jumped by 6.8 percent, compared with a 2 percent increase in February.

The overall growth in debt of 7.2 percent at an annual rate was the biggest gain since an increase of 8.25 percent in November.
Consumers have been moving to put more of their purchases on their credit cards as banks have tightened lending standards for home-equity loans in response to the deepening credit crisis.

The Fed's measure of consumer borrowing, which does not include debt secured by real estate such as mortgages or home-equity loans, stood at a record $2.558 trillion in March.

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