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Household investment is up

Consumer borrowing is back -- or is it?

The Federal Reserve reports that consumer borrowing rose at an annual rate of 8.5 percent in January. Yes, consumer borrowing is up. Here's the thing: Revolving credit -- essentially credit card debt -- fell at a 4.5 percent annual rate. So-called nonrevolving credit increased at an annual rate of 14.75 percent. What's nonrevolving credit? Mostly student loans and auto loans.

Put somewhat differently, household investment is up as people spend more on education and cars. The credit card isn't being whipped out as often, though.

About the author

Chris Farrell is the economics editor of Marketplace Money.
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Thank you. I've heard the increase in customer borrowing cited as a worrisome trend back to the old wild days of pre-2008. But, since we were also seeing reports of a consumer-driven revival of the auto market, driven largely by pent up demand to replace older vehicles, it occurred to me that the borrowing was largely due to financing these vehicles. Which would be less of a concern than a building up of, say, credit card debt since these are durable assets that are being financed.

I'd still like to see a breakdown of auto vs. student loans. And more breakdown of student loan debt. Is it due to people returning to school because of the poor job market? Or is it due to the costs of higher education being shifted to individual consumers as state support for higher education has dropped, and for-profits are making further inroads. Education is a good thing, but increased expenditures for these reasons is not a healthy trend.

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