WASHINGTON — Consumers stepped up their borrowing in February as a rebound in the use of credit cards offset a slowdown in auto and student loans.
Total borrowing rose $15.2 billion in February, the biggest gain in three months and an acceleration from January's increase of $10.9 billion, the Federal Reserve reported Friday.
The jump came in the category that covers credit cards, where borrowing rose $2.9 billion after falling in January. Borrowing from auto loans and student loans increased by a sizable $12.3 billion in February, though it was lower than in January.
Consumer borrowing is closely watched for signs of consumers' willingness to take on more debt to support their spending. Consumer spending accounts for 70 per cent of economic activity.
Analysts believe consumer spending slowed a bit in the first quarter after a sizable gain in the October-December period. But they are looking for spending to pick up again in coming months, reflecting low unemployment and strong consumer confidence. The Labor Department reported Friday that the unemployment rate dropped to 4.5 per cent in March, the lowest level in nearly a decade.
The Fed's monthly credit report does not cover mortgages or other debt secured by real estate such as home equity loans. But a separate survey by the Federal Reserve Bank of New York reports that total outstanding household debt, which does cover home mortgages, rose to $12.58 trillion at the end of 2016. That's about $100 billion below the all-time high set in the third quarter of 2008, just before the financial crisis hit.
The monthly report showed that consumer debt not secured by real estate climbed to a record of $3.79 trillion in February.
Martin Crutsinger, The Associated Press