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US March Consumer Credit Rises, But Credit-Card Use Declines


By Jeff Bater and Meena Thiruvengadam
Of DOW JONES NEWSWIRES


WASHINGTON (Dow Jones)--Americans unexpectedly increased borrowing in March,
but their credit-card use fell an 18th straight month as unemployment remained
high.

Consumer credit outstanding rose at a seasonally adjusted annual rate of
1.0%, up $1.95 billion to $2.451 trillion, the Federal Reserve said Friday.

Economists surveyed by Dow Jones Newswires had forecast a $4.0 billion drop
in consumer credit for March.

February consumer credit was adjusted upward. It fell 3.3%, or $6.21 billion,
instead of the originally reported decline of 5.6%.

The consumer credit report doesn't include numbers on home mortgages and
other real estate-secured loans, but the data are valuable because of the
insight given into U.S. borrowing habits. Consumer spending is a big part of
the U.S. economy.

It rose January through March at the fastest rate in three years, according
to the government. Bargain hunters helped propel sales in March at Kohl's
(KSS), prompting the mid-priced department store to raise its first-quarter
earnings guidance. As for the rich, auction house Sotheby's (BID) said its
first-quarter loss narrowed sharply and that Impressionist and modern art sales
are up.

Encouraging signs are surfacing in the labor market. On Friday the Labor
Department said U.S. nonfarm payrolls rose in April by the greatest number of
jobs since early 2006, indicating the recovery is gaining momentum after a deep
recession. Still, the unemployment rate, which is calculated in a different way
from payrolls, rose in a reminder of the challenges the economy still faces.
The Federal Reserve expects joblessness to remain above 9% until the end of
2010.

Revolving credit, or credit-card use, dropped $3.19 billion, or 4.5%, in
March to $852.58 billion, Friday's consumer credit data showed. The last
increase came in September 2008.

Non-revolving credit rose 3.9% in March. Within the category are loans for
cars, which have been selling better as the economy improves and consumers grow
more confident about making big purchases. February non-revolving credit
decreased $202 million to $1.593 trillion.


-By Jeff Bater and Meena Thiruvengadam, Dow Jones Newswires; 202-862-9249;
[e-mail]


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(END) Dow Jones Newswires

05-07-10 1504ET

Copyright (c) 2010 Dow Jones & Company, Inc.

15:04 050710