Financing for auto purchases and school loans led to a $7.4 billion increase in U.S. consumer credit in the month of September.
Credit was initially predicted to rise by only $5.2 billion, according to a Bloomberg News survey. The increase followed a $9.7 billion decrease in August.
Though financing rose for big ticket items, credit card and revolving debt decreased for the third month in a row. According to an article from the San Francisco Chronicle’s website, the unemployment rate at 9 percent, and the slowest pace of hiring in four months, explains why American consumers lack the confidence to borrow money.
“I can definitely understand why people might be hesitant to borrow money with the job market the way it is,” said junior Ryan Blake. “If you don’t have guaranteed income coming in, you’re going to be unlikely to take on debt that you might not be able to pay back.”
Non-revolving debt, such as educational loans, increased by $8 billion.
There was a $14.3 billion non- seasonally adjusted increase to $406.1 billion in the federal government category of borrowing. School loans are included in this category. These figures also showed an increase in non-revolving borrowing at commercial banks.
The job market is one of the major factors in the decreasing in revolving debt. Payrolls increased by 80,000 workers in October, a total that landed short of a forecast by economists. It was the least since June, according to Labor Department figures showed on Nov. 4.
Increases in the previous two months were revised up by 102,000. The unemployment rate fell from 9.1 percent to 9 percent.
“It makes sense to me that people aren’t taking chances with tacking on debt in this job market,” said junior Max Ludwig. “Most people, well the smarter people, are going to be careful about what debt they add, particularly if they are currently unemployed. Getting a job right now is no sure thing.”
“It sounds like a lot of people are learning to handle their finances more responsibly,” said junior Molly Morris. “They understand that without job security, going in debt isn’t a smart move.”