Consumers borrowed much more than expected in March, as both student and car loans shot up and credit card borrowing rose after declining in January and February. Analysts are unsure whether this news signals a real pickup in demand or just a need to lean more on credit, as job and income growth remain weak.
Consumer credit surged $21.4 billion in March, more than double analysts’ forecasts and the strongest jump for any month since November 2001. Over the last 19 months, consumer credit balances have seen 18 monthly increases.
Nonrevolving credit, which includes student and car loans, accounted for the largest part of the credit increase, climbing $16.2 billion for the month. The surge in student loans could mean that borrowers are trying to lock in interest rates before July—when costs on subsidized Stafford loans are expected to double.
As for revolving credit, which includes credit cards, debt rose $5.1 billion after declining $2.3 billion in February and $2.9 billion in January. The overall credit figures exclude home mortgages and other real estate secured loans.
For the week ended May 11, the S&P 500 Index declined 1.1% to 1,353 (for a year-to-date total return—including price change plus dividends—of about 8.4%). The yield on the 10-year U.S. Treasury note fell 7 basis points to 1.84% (for a year-to-date decrease of 5 basis points).
Source: The Vanguard Group Inc.