WASHINGTON (AP) — Consumer borrowing rose at a slightly faster pace in January as borrowing on credit cards rebounded after a slowdown in December.
Borrowing increased by $17.05 billion in January after a $15.36 billion December gain, the Federal Reserve reported Thursday. The increase reflected acceleration in borrowing in the category that includes credit cards, up $2.57 billion, after a modest $939 million December gain. Borrowing for auto loans and student loans remained strong, rising by $14.47 billion in January after a $14.42 billion December increase.
The increases pushed overall consumer borrowing to a new record of $4.03 trillion, compared to $3.84 trillion in January 2018. Consumer borrowing is followed closely for signs it provides of consumers’ willingness to borrow to support spending. Consumer spending accounts for 70 percent of economic activity.
The government reported last week that the overall economy, as measured by the gross domestic product, grew at an annual rate of 2.6 percent in the October-December quarter. That was a slowdown from growth rates of 4.2 percent in the third quarter and 3.4 percent in the third quarter of last year. The deceleration reflected weaker consumer spending, which grew at a still-solid 2.8 percent in the fourth quarter, down from a 3.5 percent increase in the third quarter.
For the year, the GDP grew by a solid 2.9 percent, helped by the 2017 tax cut legislation and by a boost of billions of dollars in spending on the military and domestic programs. Many analysts believe the economy will slow this year to growth just above 2 percent as the support from the tax cuts and government spending increases starts to wane.
The Federal Reserve’s monthly report on consumer spending does not cover home mortgages or any loans secured by real estate such as home equity loans.