After two years of gloomy and depressing
financial results, there is finally cause for celebration as the
Federal Reserve reveals US revolving credit has risen for the first
time since 2008.
The Fed’s report on December consumer
borrowing showed revolving credit increased by $2.3bn, or 3.5%, to
$800.5bn. The last time credit-card debt showed an increase was in
August 2008 – a month before investment bank Lehman Brothers
filed from bankruptcy.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The results are being touted as the start of a
change in fortune for the financial services industry as it looks
to be a sign that consumers in the US are growing in confidence
about the state of the economy.
December is the third consecutive month where
a growth in revolving credit has been recorded, with the Fed
revising its original figure of $1.5bn in November 2010 and thus
claiming a rise of $2bn.
Consumer credit outstanding now stands at
$2.41trn with the month of December contributing $6.1bn, or 3% to
this figure. The Wall Street Journal says economists
surveyed by Dow Jones Newswires had forecasted the Fed data would
only show consumer credit rising by $2.5bn.
Results from e-commerce and payment processing
provider First Data’s SpendTrend analysis of January 2011 further
compound this feeling of optimism in the industry.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataIt found more customers opted to pay with
credit cards during the month of January with transaction growth on
the payment method also reaching a 13-month high.
“Consumer spending during Q4 2010 was the
strongest in nearly five years and the momentum from the strong
holiday season carried over into January,” said Silvio Tavares,
senior vice president and division manager of First Data
Information and Analytics Services.
Across all card types, First Data found that
January’s total dollar volume growth increased 7.4% year-on-year
and was up from December’s growth of 6.5%. Transaction growth also
improved from the previous month by 0.7% to 8.3%.
First Data’s SpendTrend tracks same-store
consumer spending by credit, signature debit, PIN debit, EBT cards
and checks at US merchant locations.
