Credit card debt rose 2.9% in March, a sign that shoppers have more confidence after the longest decline in credit card use since the Federal Reserve began keeping records in 1943. (Source: Federal Reserve, G.19 Release, May 6, 2011)
This is good and bad news for the economy. Short-term, it's good news, because credit card debt boosts personal consumption, which drives 70% of the U.S. economy. Long-term, it's bad, because Americans need to reduce their credit card debt load, which is a whopping $796 billion, or $6,689 per household. Note: This estimate is based on 119 million households or 308.7 million / 2.59 persons per household. (Source: U.S. Census, 2010 Data; Average Household Size)
Non-revolving debt (loans for auto, furniture and consumer electronics) continued its upward trend. In March, it rose 3%, to $1.63 trillion or $13,697 per household. It's been increasing since early 2009 thanks, in large part, to an increase in government loans for education.
What It Means to You
Government support of education means more people will come out of this recession at higher skill levels. These graduates will have a better future - the unemployment rate for college graduates is only 4.5%. If you're thinking about going to college, take advantage of government programs now. They could be a victim of Congressional budget cutting in 2011.
As for credit card debt - let everyone else take out loans and spur economic growth. Continue to dump debt and get light....and avoid becoming a statistic in the Federal Reserve's G-19 report next month.
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