Monday, March 8, 2010

Is the Consumer Relevering?

Sure looks like a possibility based on Friday's consumer credit release. Marketwatch details:

In an encouraging sign for the economy, U.S. consumers increased their debt in January for the first time in a year, just the latest hint that household demand may be on an upswing.

Although the economy has picked up steam lately, many economists don't believe it will be on a sustainable path unless consumers restart their spending.

This wasn't too big a surprise following last week's downturn in savings (paying down debt counts as savings), but maybe we should not be counting out the consumer in the short run. We shall soon see... later this week we get February's retail sales figure.

Source: Federal Reserve