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Consumer Borrowing Expansion - 2/4/15

As consumer confidence rises, so too does consumer indebtedness.  According to the Federal Reserve, in November, U.S. consumer borrowing expanded by another $14.1 billion after a $16 billion increase in October.  The gains in aggregate consumer borrowing pushed consumer debt excluding real estate loans to a record level of $3.3 trillion according to the Associated Press. 

The latest data are consistent with the notion that an improving economy and stronger employment gains over the past year are rendering consumers more comfortable with added debt.  While total credit card debt declined by just less than a billion dollars in November, that decline was more than countervailed by a $15 billion increase in the category that includes auto and student loans.  By November 2014, borrowing was 7 percent above where it was a year prior, with auto and student loans up by a combined 8.4%. 

Though credit card debt declined in November relative to October, it was still up by 3.4% on a year-over-year basis.  A separate report issued by the New York Federal Reserve Bank tracks all forms of consumer borrowing including home mortgages, and indicates that total borrowing increased by nearly $80 billion during the third quarter to $11.7 trillion.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.