WASHINGTON -- Consumers increased their borrowing in January at the slowest pace in more than a year with borrowing on credit cards declining for the second time in the past three months.
The Federal Reserve reported Friday that consumer borrowing expanded $11.6 billion in January after a $17.9 billion gain in December. It was the smallest monthly increase since borrowing rose by $8.3 billion in November 2013.
Even though the January increase was more modest than the gains over the past year, it still pushed total borrowing to a fresh record of $3.33 trillion, an increase of 6.9 percent over the past year.
Borrowing in the category that includes credit cards actually declined by $1.16 billion in January after a $6.2 billion increase in December and a decrease of $537 million in November.
Borrowing in the category that covers auto loans and student loans rose $12.7 billion in January after a gain of $11.7 billion in December.
During the past year, borrowing in the category of auto and student loans has risen 8.3 percent while borrowing in the credit card category has risen at a much slower 3.2 percent.
The auto and student loan category has been growing faster than credit card debt since the recession of 2007-09. That reflects the fact that many workers who lost jobs during the downturn decided to take out loans to go back to school, and some students opted to stay in school longer because jobs were scarce.
The slowdown in credit card use could reflect greater caution among consumers about taking on debt to finance consumer spending. But economists are hoping that with job growth strengthening so much over the past year, consumers may step up their use of credit cards to finance purchases. That would give a boost to consumer spending and the overall economy.
The Fed's monthly report on consumer credit does not cover mortgages, home equity loans or other types of loans secured by real estate.
Consumer confidence in the U.S. rebounded last week from its lowest level of the year as stocks reached record highs, bolstering Americans' wealth.
The Bloomberg Consumer Comfort Index rose to 43.5 in the period ended March 1 from a reading of 42.7 the prior week that was the lowest this year. Measures of the current state of the economy, personal finances and the buying climate advanced.
The moods of wealthier consumers, who tend to own stocks, rose to a five-week high as the Standard & Poor's 500 index and the Dow Jones industrial average advanced to their highs, the report showed. The best labor market since 1999 and cheaper gasoline also are delivering a boost to household spending, which accounts for about 70 percent of the economy.
The recovery in confidence was "likely in celebration of the stock market's advances," said Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg. Among those with annual incomes of more than $100,000, "it's been higher in this group just twice since October 2007."
The government said in a separate report Friday that U.S. employers added 295,000 jobs in February, the 12th straight monthly gain above 200,000.
Information for this article was contributed by Shobhana Chandra of Bloomberg News.
Business on 03/07/2015