Consumer borrowing in the U.S. rose at a slower pace in January as Americans cut back on their credit-card purchases.
The $13.7 billion gain followed a revised $15.9 billion advance the previous month that was smaller than initially reported, the Federal Reserve said in Washington. The median forecast of economists called for a $14 billion advance in January. Non-revolving debt, which includes financing for cars and college tuition, rose by the most in four months.
Rising equity and property values generated record household wealth, putting Americans in a position to take advantage of cheaper borrowing costs for purchases of big-ticket goods such as cars. Faster job and wage growth would provide a bigger boost for the consumer spending that accounts for almost 70 percent of the economy.
“We still see a slow but positive growth in the economy and it’s fueling a similar pattern for the consumer-credit data,” Mike Englund, chief economist at Action Economics in Boulder, Colorado, said before the report. “We have seen faster growth in consumer credit than consumption since the middle of 2012 and that’s largely because of that shift of borrowing toward student loans, which has allowed these numbers to outpace the economy.”
Estimates of the change in consumer borrowing among the 30 economists surveyed by Bloomberg ranged from increases of $8 billion to $16 billion after a previously reported $18.8 billion rise in December. The report doesn’t measure borrowing to secure real estate, such as mortgages and home-equity lines of credit.
The Fed’s figures showed revolving debt, which includes credit-card purchases, fell by $225.6 million in January, after a $3.1 billion gain a month earlier. The slowdown corroborates a report last month that showed retail sales declined in January by the most since June 2012.
Non-revolving credit, such as that for college loans and the purchase of vehicles and mobile homes, climbed by $13.9 billion, after a $12.8 billion increase the month before. Auto lending increased $8.9 billion in the fourth quarter from the prior three months.
Lending to consumers by the federal government, mainly for student loans, rose by $28 billion in January before adjusting for seasonal variations after rising $5.4 billion the prior month, today’s Fed report showed. In the fourth quarter, student-loan debt climbed $12.6 billion.
Rising portfolio and home values have allowed Americans to clean up their balance sheets. A report from the Fed yesterday showed net worth for households and non-profit groups rose by $2.95 trillion in the fourth quarter, or 3.8 percent from the previous three months, to a record $80.7 trillion.
Faster job growth, and the wage gains that go along with it, may make consumers more comfortable using their credit cards for purchases.
A report today showed employers added more workers than projected in February, indicating the economy is bouncing back from a weather-induced setback. The 175,000 gain in employment followed a revised 129,000 increase the prior month that was bigger than initially estimated, the Labor Department said.
Yields on Treasury securities climbed today as the data probably means Fed policymakers will keep trimming monthly bond purchases aimed at spurring growth. The Federal Open Market Committee’s next meeting is March 18-19.
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