Consumers' appetite for credit growing
February 19, 2014-- Furniture Today,
High Point - American consumers' willingness to borrow money to buy big-ticket items continues to grow, according to newly released statistics from the Federal Reserve.
Total U.S. consumer credit outstanding rose 6.2% last year and has rebounded by 17.1% since the recession year of 2008.
Industry analyst Jerry Epperson of Mann, Armistead & Epperson in Richmond, Va., said the credit number is significant in comparison to the change in total U.S. retail sales.
"Total retail sales last year were up a touch over 4%, so 6% growth in credit is showing that the consumer is being more aggressive purchasing durables, most of which require credit to purchase," he said. "It also reflects that the consumer feels comfortable using credit again after paying off debt from 2008 through 2011 and that other assets are back to normal (home values, stock market, etc.)."
Total consumer credit of around $3.1 trillion in 2013 was up 6.2% from $2.9 trillion in 2012 and was up 17.1% from 2008, according to the government numbers.
Non-revolving credit, or loans not included in credit card debt - such as borrowing for cars, education or big-ticket items like furniture - has grown at a faster clip than revolving credit, which includes most credit card debt. Revolving credit also has been recovering slowly since the trough in 2010, rising 2.5% in the past three years.
According to Furniture/Today's latest Furniture Store Performance Report last year, 44% of furniture store sales are by credit cards and 29% is by cash, check or check card. A total of 27% is by private-label financing or in-house credit.