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Consumers Increased Credit Card Use in March

Americans spent more than they earned in March, using credit cards to finance the difference, according to the latest data released by the U.S. Department of Commerce and the Federal Reserve Board.

After rising only 3.1% in February compared to the same month one year before, personal disposable (after-tax) income jumped by 3.3% in March. Consumer spending was up 3.4% compared to the same month last year. Most of the increase was due to a 3.8% surge in services spending.


Total personal consumption expenditures totaled $11.8 trillion in March, a 3.4% rise on a 12-month smoothed basis, their biggest monthly increase for the measure in a year.


Unlike in recent months when durables spending drove overall consumption, a big portion of March’s increase in consumer spending was on services. There was a sizable rise in home utilities spending due to wintry weather in much of the country. Health care spending surged as many newly-insured Americans under the Affordable Care Act (“Obamacare”) finally scheduled long-postponed doctor appointments. Spending on education and financial services also helped drive the increase.

The personal savings rate edged down to 3.8% in March, its lowest rate in almost one year and a half, and a continuation of the gradual decline that began in September 2013. 


Consumers increased their use of plastic in March. Adjusted revolving credit, which is predominantly from credit cards, increased by 0.9% in March compared to the same month last year, a bigger jump than February’s 0.6% increase.