WASHINGTON — The Federal Reserve reported that consumer credit debt rose $5.2 billion in the month of February for a total of $2.54 trillion, not including home equity borrowing.
The Fed also revised its January debt figure upward to $10.3 billion, making that month's total $6.9 billion.
Brian Turner, manager of advisory services for Southwest Corporate noted in the April Resources report that as underwriting standards at the nation's banks have toughened in reaction to subprime mortgage losses, consumers have exhausted home equity alternatives and have turned to credit cards. Revolving debt rose $4.7 billion in February, compared with $5.6 billion in January.
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Consumers fell behind at the fastest pace in 15 years in the fourth-quarter in making payments on credit cards, home equity and auto loans. And they are cutting back on spending–the bulwark of the economy at two-thirds of activity–in light of rising energy costs and volatile home values. In February, spending rose at the slowest pace in more than a year, an increase of 0.1%.
"I believe the key will be the labor market," said Turner. "We've seen job growth decline for three consecutive months, and if we see a consistency there and it grows deeper, I think that will be our biggest problem."
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