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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (142328)	1/8/2002 3:24:03 PM
From: patron_anejo_por_favor	Read Replies (2) \| Respond to of 436258

Consumer debt explodes: quote.bloomberg.com 01/08 15:00 U.S. Consumer Borrowing Surged $19.8 Billion in November By Brendan Murray Washington, Jan. 8 (Bloomberg) -- U.S. consumer borrowing rose more in November than at any time in almost six decades as shoppers took advantage of incentives from automakers to buy new cars with interest-free loans, Federal Reserve figures showed. Consumer debt increased $19.8 billion during the month, the Fed reported. That follows a revised $11.2 billion increase in October that was more than the $7.0 billion initially reported last month. Low borrowing costs are helping underpin consumer spending, which accounts for two-thirds of an economy that's been in recession since March. Non-revolving credit, which includes auto loans, surged during the month. ``Car sales were pretty strong and most folks feel that there's going to be a recovery in the economy real soon,'' said Mark Vitner, senior economist at Wachovia Securities Inc. in Charlotte, before the report. Analysts expected consumer credit to rise by $4.7 billion during November. The increase was the largest since the Fed started keeping records in January 1943. Economists use the numbers to help gauge changes in consumer spending. Even with a December unemployment rate at a 6 1/2-year high of 5.8 percent, incentives are enticing buyers. Non-revolving loans increased $14.4 billion in November after rising $14.7 billion in October. Autos sales rose 7.5 percent in November as consumers took advantage of zero-interest financing offered by automakers such as General Motors Corp. and Toyota Motor Corp. For automobile makers, November's seasonally adjusted annual sales rate was 18 million vehicles. While that was slower than the 21.3 million rate in October, the pace probably led to the second- best ever sales year, according to Autodata Corp. Mortgages The consumer credit report doesn't include loans secured by real estate, such as mortgages and home equity lines of credit. Refinancing surged to a record in November, according to figures from the Mortgage Bankers Association of America. That may have encouraged consumers to take on more debt for other purchases, such as autos. Credit card and other revolving debt increased $5.4 billion in November after falling $3.5 billion. Customers at other credit card banks are spending more and still managing to pay their bills. MBNA Corp., the second-largest U.S. credit card issuer, in December said it expects to meet or exceed fourth-quarter and full-year analysts' estimates because it made more loans and added customers in the period. Still, since increasing at a 10.3 percent rate in the first quarter, borrowing has cooled. Consumer credit grew at a 1.3 percent annual rate in the third quarter after increasing at a 4.6 percent pace in the prior three months. Employment The economy lost 1.1 million jobs last year, the most since a decline of 2.2 million in 1982. The jobless rate rose 1.8 percentage points last year from 4 percent in December 2000. The increase was the biggest since a 2.3 percentage-point rise in 1982, when the economy was in recession. The economy, which entered in March its first recession in a decade, contracted at a 1.3 percent annual rate in the third quarter, the biggest drop since the first three months of 1991. U.S. banks have responded to the recession by imposing tighter standards on business and consumer loans during the past three months. Some credit card issuers have signaled customers are having trouble making payments. Providian Financial Corp., the sixth-biggest U.S. Visa and MasterCard issuer, last week said it will fire another 800 employees to cut costs as more of its credit-card customers are unable to pay their bills. Personal incomes fell 0.1 percent in November after similar drops in the prior two months, the longest string of declines since November 1953-January 1954, according to Commerce Department statistics. The level of consumer debt excluding mortgages is higher now than it was during the last recession, in 1990-91. Household debt payments as a percentage of disposable personal income was 7.69 percent in the third quarter, compared with 6.97 percent in the first three months of 1991.