Consumers have been holding onto their credit cards and reigning in their borrowing habits. The cutback seems to agree with the recent consumer confidence report the Conference Board released at the end of May that showed the confidence declining.
The Federal Reserve announced yesterday that consumers decreased their borrowing for the month of April. The $6.5 billion increase for the month was half of what was borrowed in March, according to a report by BusinessWeek. For the month, $9.96 billion were borrowed to pay for student loans and auto loans, which was the driving force behind the borrowing for the month.
The seasonal total has been adjusted to $2.55 trillion borrowed. The all-time high was $2.58 trillion in July of 2008.
If the slow job market is any indication of how consumers are reacting to borrowing, then borrowers may be more inclined to borrow less in the coming months after the unemployment rate increased by 0.1% this past month. Also a May report by the University of Michigan showed that one in five families is already in debt.
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