Economy Watch: Americans Borrowing More (for Schooling)
- Apr 12, 2013
The Federal Reserve reported on Thursday that total consumer credit was up at an annualized rate of 7.8 percent in February, compared with a 5.5 percent increase in January. Once again, the bulk of the increase in credit was non-revolving loans, up an annualized 10.9 percent for the month, compared with revolving loans, which were up only 0.8 percent.
Non-revolving loans, according to the Fed’s definition, includes automobile loans and the like, such as loans for mobile homes, education, boats, trailers, or vacations. These loans may be secured or unsecured. In 2008, Americans owed a bit more than $1 trillion on revolving credit (mainly their credit cards), while non-revolving totaled $1.52 trillion, give or take a few billion.
In 2012, according to the Fed, the revolving total was about $848 billion, while the non-revolving total was $1.95 trillion. Americans have somewhat delivered their credit cards, but more than made up for that in aggregate debt terms by taking out (mostly) more student loans. Changes made to student lending a few years ago mean that the federal government is one of the larger creditors for these loans.
PC sales plummet
Retail sales numbers will be out soon, but one subsector of the consumer economy has already experienced a bad report, namely PC sales. According to researcher IDC this week, worldwide shipments of PCs in the first quarter of 2013 were 76.3 million units, down 13.9 percent from a year earlier. That’s the steepest drop in more than 10 years, edging out even the declines during the worst of the recession, and much worse than predicted.
The company blamed the new Windows 8 operating system, which is roundly disliked in many quarters, for some of the decline, but more fundamentally people are keener to buy tables and smartphones these days, which do many of the same things as PCs without even the bulk of a laptop. “At this point it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market,” Bob O’Donnell, IDC Program vice president, clients and displays, noted in a press statement.
“While some consumers appreciate the new form factors and touch capabilities of Windows 8, the radical changes to the UI, removal of the familiar Start button, and the costs associated with touch have made PCs a less attractive alternative to dedicated tablets and other competitive devices,” he posited.
Unemployment claims dip
For the week ending April 6, initial unemployment claims were 346,000, a decrease of 42,000 from the previous week, according to the U.S. Department of Labor on Thursday. The four-week moving average was 358,000, an increase of 3,000 from the previous week, reflecting the fact that during most of March, claims were up.
Wall Street set another record on Thursday, with the Dow Jones Industrial Average up 62.9 points, or 0.42 percent. The S&P 500 advanced 0.36 percent and the Nasdaq gained 0.09 percent.