Consumer habits across all sectors changed amid Coronavirus, and the lending industry is no exception, according to stats by the Federal Reserve.
Forget the fact that banks are more reluctant to give funding; US Borrowers are using loans more cautiously as the two-wave pandemic threatens to cripple the economy.
According to the Fed Reserve, consumers borrowed more student and car loans in October. Nevertheless, they reduced borrowing related to credit cards, a clear indicator of people watching their spending as a second wave comes with a rise in infections.
Findings show that consumer borrowing went up 2.1 percent in October to $4.16 trillion, thanks mainly to a 4.8 percent increase in loan categories tied to car and student loans. Borrowing connected to personal credit lines like credit cards dipped 6.7 percent.
These figures lend credence to the thought that consumers are still struggling to make a full comeback from COVID’s economic setbacks.
Overall, US consumer borrowing remains 1 percent below its level before COVID. Due balances on credit cards remain down almost 11 percent than Feb levels before the global health crisis caught fire.
Other findings by the Commerce Department show US consumer spending went up in October, but this jump was the smallest recorded since April, in the peak of store shutdowns.
Meanwhile, customer confidence has been dropping significantly amid an unpredictable economy. Worrying stats from a separate poll by the Conference board shows the worst drop was in November, even threatening to discourage spending in the upcoming months.
Experts monitor customer borrowing trends to analyze households’ willingness to seek more loans to use in consumer spending, which makes up ⅔ of all economic activity.
More and more signs point towards slower growth in customer spending. A recent government announcement warned that hiring went down in November to touch its slowest pace ever since COVID. And though the unemployment rate dipped by 0.2 percent, this was mainly because most job-seeking US citizens stopped applying for jobs and weren’t considered jobless.
Customer spending habits change with the times, and the above stats show their responses to the COVID pandemic.
Tracking consumer spending is an excellent way to monitor the fiscal environment because it makes up a significant ⅔ of all economic activity.
Author Bio: Payment industry guru Taylor Cole is a passionate payments expert at bestpaymentproviders.com who understands the complex world of merchant accounts. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie with ice-cream on his backyard porch, as should all right-thinking people.