Subdued December Rise in Consumer Credit

Borrowing by U.S. consumers increased at a slower-than-expected pace in December as credit card use was subdued during the holiday shopping season, Federal Reserve figures showed. Borrowing rose by $3.9 billion for the month to $1.236 trillion after falling a revised $3.6 billion in November. Previously, the Fed said November borrowing declined $4.2 billion. Before the report, analysts had expected an increase of $4.6 billion for December. Analysts watch the Fed’s consumer credit statistics because they help them gauge changes in consumer spending, which accounts for two-thirds of overall economic activity. A subdued showing could point to a slowdown in economic activity in 1998, as the financial crisis in Asia inflicts damage on the U.S. economy. The Fed report also showed that the pace of consumer credit was rising at a 3.9% annual rate during December. That compares with a 3.6% decline in the pace of borrowing in November. By category in December, revolving loans, which include credit cards, increased $200 million; auto loans rose $5.5 billion; and other types of installment loans decreased $1.7 billion.