Growth in consumer borrowing slowed in December
WASHINGTON (AP) — Consumers increased their borrowing in December at the slowest pace in six months, as growth in credit card usage decelerated sharply.
Total borrowing rose $14.2 billion in December, smaller than November's increase of $25.2 billion, the Federal Reserve reported Tuesday. Borrowing in the category that covers auto loans and student loans rose by $11.8 billion, just slightly below the $13.4 billion increase in November.
But borrowing in the category that covers credit cards slowed to a gain of just $2.4 billion after a surge of $11.8 billion in November. It was the weakest showing since credit card debt fell last February.
The big November gain in credit card debt had been viewed as a good sign at the start of the holiday shopping season.
The December increase pushed total borrowing to a fresh record of $3.76 trillion.
Economists believe growth in consumer credit will remain strong in 2017, reflecting low unemployment and further solid gains in employment and consumer confidence.
The overall economy, as measured by the gross domestic product, increased just 1.6 percent in 2016, held back by headwinds from such factors as a rising value of the dollar which depressed American exports.
President Donald Trump campaigned on a pledge to cut taxes, roll back regulations and take other steps to double economic growth in coming years to around 4 percent. While economists believe Trump's program, if enacted by Congress, will boost growth, their forecasts call for more modest gains pushing growth to around 2.5 percent to 3 percent.
The Fed's monthly consumer credit report does not cover home mortgages or other loans secured by real estate such as home equity loans.