WASHINGTON – American consumers increased their borrowing at a slower pace in January, as the category that covers credit cards recorded the smallest increase in three years.
January’s gain of $13.9 billion followed a $19.2 billion increase in December and a November surge of $30.9 billion, the Federal Reserve reported Wednesday.
In January, borrowing in the credit card category edged up $701 million. That followed an increase of $6.1 billion in December and was the smallest monthly advance since a gain of $605 million in February 2015. Borrowing in the category that covers auto loans and student loans rose by $13.2 billion in January, basically matching the $13.1 billion increase in December.
Consumer borrowing is a key metric that can reveal strength in consumer spending, which accounts for 70 percent of economic activity.
The January advance was in line with expectations. Economists had expected a slowdown given that auto sales in January decelerated to a five-month low and retail sales excluding autos posted only a tiny advance.
The overall economy, as measured by the gross domestic product, grew at a moderate pace of 2.5 percent in the October-December quarter. For 2017, the economy grew by a moderate 2.3 percent. But many analysts believe growth this year will be stronger, stemming from the $1.5 trillion tax cut passed by Congress in December and $300 billion in increased government spending over the next two years.
Subscribe to the Morning Review newsletter
Get the day’s top headlines delivered to your inbox every morning by subscribing to our newsletter