Good for the Economy, but Vexing: Consumer Credit in U.S. Rises for First Time in Year

[Mike 03]

Excerpt:

By Vincent Del Giudice

March 5 (Bloomberg) -- Borrowing by U.S. consumers unexpectedly rose in January for the first time in a year, led by auto and student loans, a sign Americans are gaining confidence in the economy.

Consumer credit increased $5 billion, or 2.4 percent at an annual rate, the Federal Reserve said today in Washington. Borrowing dropped $4.6 billion in December, more than first estimated. The figures track credit card debt and non-revolving loans, including those for automobile purchases.

Stocks rose after the report indicated that some banks may be more willing to lend as the economy recovers from the worst recession since World War II. Growth may get a bigger lift from consumer purchases that account for about 70 percent of the economy when companies start to hire.

Link Here:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aV36eEr_azao&pos=1

My comment:

It seems very premature to me to conclude from a rise in credit for vehicles and student loans that the American consumer is gaining confidence, since these are relative necessities.

Secondly, why is it a good thing we are securing more loans when excessive borrowing is what got us into this mess in the first place?