Recent figures released by the Federal Reserve reveal that while consumer spending increased in the first quarter of the year, consumer credit card debt decreased, an indication that consumers are hesitant about accruing more credit debt.
Consumer spending in March saw the largest increase since August 2009 as incomes also rose. Household spending, which comprises 70 percent of the U.S. economy, increased by 2.9 percent from January through March, Bloomberg reports.
The Fed said last month that it “expects economic growth to remain moderate over coming quarters and then pick up gradually.”
Despite the increase in spending, a decrease in consumer credit card borrowing indicates that consumers are still uncertain about the economy. In February, consumer credit card debt totaled $799 billion, a 15 percent decrease from December 2007. Nearly all U.S. banks have reported that credit card defaults are at all-time lows, according to Associated Press.
Though consumer credit card borrowing has decreased, other areas of consumer debt saw massive increases. Student loan debt increased from $117 billion in 2011 to $1 trillion. More than 80 percent of individuals ages 18 to 34 who took out student loans still carry a balance, and more than 30 percent of those owe more than $20,000, GreenvilleOnline reports.
Mortgage debt, however, decreased more than seven percent since the beginning of 2008. A March report from the Brookings Institution revealed that consumers who owe more than the worth of their homes still carry high debt and, as a result, are forced to cut spending.