US consumer borrowing growth slows after near-record surge
US CONSUMERS dialled back the pace of borrowing in February after a near-record increase a month earlier.
Total credit increased US$18.1 billion in January after a revised US$37.1 billion jump in December, according to US Federal Reserve data on Friday (Mar 7). The median estimate in a Bloomberg survey of economists called for a US$14.9 billion advance.
Outstanding credit card and other revolving debt climbed US$9 billion. Non-revolving credit, such as loans for vehicle purchases and school tuition, advanced by a similar amount. Both were decelerations from the prior month.
Stubborn inflation, high borrowing costs and the end of pandemic savings continue to take a toll on household finances. Data earlier Friday showed the labour market softened last month as unemployment rose, setting a weak backdrop just as President Donald Trump’s policies raise concerns about the broader economy.
Separate government showed last week US consumers unexpectedly pulled back on spending at the start of the year – though extreme winter weather in some parts of the country likely played a part.
Even so, Fed policymakers have indicated they will keep interest rates steady until there’s more progress on taming inflation, which presents another headwind for Americans holding higher balances on credit cards and other loans.
A record share of consumers is now only making the minimum payment on their credit cards, and car owners are missing their monthly loan payments at the highest rate in more than 30 years. The share of outstanding US consumer debt that’s in delinquency rose at the end of 2024 to the highest in almost five years, according to the New York Fed. BLOOMBERG
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