Several recent tabulations suggest that the economic recession may have produced a shift in the habits of consumers in Tennessee and across the country, possibly including their approach to debt management and credit card spending.
The first report, recently issued by the U.S. Commerce Department, found that consumers did not increase their spending in June from the previous month, despite incomes growing at the fastest pace in 3 months. According to another report compiled by the Federal Reserve, household debt — including mortgages and home equity lines of credit — declined for the 16th consecutive quarter in March. Finally, credit card debt fell $3.7 billion to $865 billion, an amount just slightly higher than the post-recession low reached in April, 2011.
Perhaps the flat pace of spending can be blamed on continued low confidence in the economy. Although 163,000 jobs nationwide were added in July, the hiring rate for most of the year hasn’t been enough to lower the unemployment rate, which is still over 8%. The economy expanded at a 1.5% annual pace in the last quarter, which represents a 1.9% decline from the first quarter of this year.
The recession might also have produced a value-shift in consumers, as evidenced by their willingness to incur debt in certain areas. Although spending remained flat and credit card debt decreased, total consumer borrowing actually rose in the areas of auto and educational loans. In fact, student loan debt has risen 54% since mid-2008, according to a regional bank in the Federal Reserve System.
Source: Memphis Commercial Appeal, “Consumers used credit cards less in June, but still sunk deeper in debt,” Aug. 7, 2012