Credit no longer a worry for US shoppers.
For over two years people have been watching their pennies across the US until now. It has been revealed that Americans are returning to their credit cards as their confidence in the Country’s economy grows.
It was the first increase in card use in 27 months and raised overall consumer borrowing by three per cent in December, the third monthly gain in a row.
Use of credit cards rose 3.5 per cent and car loans were up 2.8 per cent.
When America and the rest of the world succumbed to the global financial crisis in 2007 the country was plunged into recession. To combat the effects the cautious public cut back on spending, borrowed less money and started to save.
This drop in borrowing had a damaging effect on the growth of the economy as consumer spending equals 70 per cent of total economic activity.
It is thought that consumer confidence will continue to lead more people back to borrowing in 2011, although economists stress that levels seen in the middle of the last decade are unlikely to be repeated.
A rise in total borrowing in December was expected by analysts who were aware of the boost in auto loans. The increase in credit card debt was not expected. Christmas trading saw retailers have the best sales in the four years since the credit crunch.
Does this news represent a turning point in the global financial crisis?