More Americans heading back to school with low wages and high unemployment
San Francisco, CA -- (SBWIRE) -- 01/14/2013 -- The average American consumer took on more debt within the month of November in order to buy cars and attend school, but in general stayed cautions when it came to credit cards.
The Federal Reserve stated that consumers increased their borrowing rate in November, to the tune of $16 billion from October, with a seasonal adjusted record of $2.77 trillion.
The borrowing that covers vehicle and education loans increased $15.2 billion. A category that outdid credit card debt, which rose by $817 million, in comparison.
The difference in borrowing illustrates an overall trend that started during the recession, which started in 2007. Half a decade ago, Americans carried over $1 trillion in credit card debt. That was n all-time high. In November, the figure fell 16.5% from the $1.03 trillion.
In that same time period, student loans have increased at a dramatic pace. The category that includes auto and school loans has grown by 22.8% higher than in July 2008. Many Americans who lost their jobs went back to school, helping to boost the total.
The increase in November further reflects gains in auto sales, which saw a 13.4% increase in 2012. Replacing vehicles in Superstorm Sandy may have helped in the contribution to the total, but the exact number is not known as of yet.
Analysts do expect the trend in borrowing to follow the trend in 2013. These analysts predict small increases for credit cards, and will assume strong gains in the auto and educational loans.
Barclays Research analyst Peter Newland noted that the slowed growth and easing of credit standards did help inflate credit card borrowing in 2012.
Paul Edelstein, who is an economist at Global insight, noted consumers were more willing to take on debt, but the slow wage growth, coupled with high unemployment kept many households keeping budgets tight.
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