Growth of consumer debt slows in February
Consumers increased their borrowing in February at the slowest pace in four months, the Federal Reserve reported Friday.
Meanwhile, in another report released Friday, sales at U.S. wholesalers increased faster than inventories during February, which may set the stage for a rebound in manufacturing in coming months.
Consumer borrowing rose at an annual rate of just 1.5% in February. That was down from a 3.3% growth rate in January and marked the smallest increase since October.
The moderation in February was led by consumers borrowing less freely to finance cars, vacations, education and other so-called nonrevolving credit. Demand for such credit edged up at only a 0.4% pace. That was down sharply from a 4.2% growth rate in January.
Consumers didn’t lay off on their credit cards, however.
Use of revolving credit, primarily credit cards, rose at a brisk pace of 3.4% in February. That was a big pickup from a 1.7% growth rate logged in January.
Still, the slower overall growth in consumer borrowing comes as gasoline prices are rising, the housing market is in a slump and the stock market has experienced some turbulence.
Consumers are a major shaper of overall economic activity, and thus analysts monitor various barometers closely for clues about their willingness to spend.
So far, consumers have been spending sufficiently to keep the economy moving ahead despite the painful housing slump. Economists attribute consumers’ resiliency to the fact that the job market is staying healthy and that paychecks are growing.
The increased borrowing pushed total consumer debt up $2.97 billion to a record of $2.41 trillion in February.
The Fed’s measure of consumer borrowing does not include mortgages or other loans secured by real estate.
Meanwhile, the 1.2% rise in wholesale sales followed a 0.9% decline a month earlier, the Commerce Department said. Stockpiles of unsold goods at wholesalers rose 0.5% in February after rising 0.6% in January.
Goods on hand represent a 1.15-month supply at the current sales pace, down from 1.16 months, suggesting that companies are making headway in reducing their stocks of unsold merchandise. Leaner inventories may help stabilize orders and production in coming months.