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According to the Federal Reserve's Monthly Credit Report, consumer credit debt saw its largest jump in three years. In June, consumers went three billion dollars more into revolving debt, for a total of $793 billion dollars in total consumer credit card debt. The Fed doesn't usually comment on its findings, and this is a reversal of spending-saving trends that persisted through much of 2011 and 2010.

New Debt, Same Unemployment Trends

Between 2009 and 201, amidst record unemployment and mass bankruptcy for many of the Country's of oldest and once sacred banks and financial intuitions, revolving debt declined steadily 175 billion dollars. In May, non-revolving debt continued to rise steadily at 1.3 percent, for a total of 1.3 trillion in total non-revolving consumer debt.

During the worst of the Great Recession, unemployment hovered at record highs, between 9 and 10 percent. This month, unemployment is steady at 9.2 percent. The specter of unemployment and what lawmakers and policy wonks are calling "The Jobless Recovery"-a scenario where the market rebounds but unemployment trends are slow or completely stagnant - should preclude the same conservative consumer spending trends that dominated the worst of the Great Recession.

Creditors Raise "Consumer Debt Ceiling"

New federal financial regulations in 2010 put creditors on notice. Gone were the days of retroactive or sudden interest rate changes. Creditors would be required to give consumers 45-days notice if their interest rates were about to change. Interest being the primary financial instrument through which credit card companies make money, they sanctioned new debt limits on consumers and higher interest rates. It may be said that the Fed's regulations worked, for a time, as creditors were forced to reign in consumer spending with higher interest rates.

While congressional members and President Obama are in heated talks as to whether or not to raise the National Debt Ceiling-the legal limit to which the US Government can borrow and spend-- creditors are slowly accepting new debtors. This is the first time since 2008 that the 16 biggest financial houses in the US who extend revolving credit have lowered their qualification criteria. Creditors expect positive, 12-18 month economic growth and say they are lowering their standards because of a competitive environment. In order to curb their risk, creditors are imposing high monthly and introductory interest rates and fees.

Credit Card Issuance Indicator of Nationwide Growth?

FICO, a company that measures indexes and measures credit risk, expects that half of all credit balances will grow over the next six months. To boot, FICO attributes this half-hearted increase in consumer credit card debt to wealthier Americans finally relaxing the purse strings; however, with unemployment still looming with 14 million Americans still looking for jobs, it expects that many of these people will be unable to pay of their monthly balances.

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By Chris Marvin Lee
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