Consumer borrowing rises $5.2b in February
Pace slows, but total hits $2.54t, says Fed
WASHINGTON - US consumer debt rose less than forecast in February as Americans slowed credit card use and purchases of items such as cars financed with nonrevolving credit, Federal Reserve statistics showed.
Consumer credit increased $5.2 billion for the month to $2.54 trillion, the Fed said yesterday. In January, credit gained $10.3 billion, more than a previously reported increase of $6.9 billion. The Fed's report doesn't cover borrowing secured by real estate.
US banks and other financing companies reduced lending after the collapse of the subprime mortgage market. At the same time, consumers are scaling back spending, and those who've exhausted home-equity loans have few alternatives other than credit cards.
"Consumers were still reaching for the plastic credit cards in February, but for how long is a big question mark," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York. "The credit-market turmoil is going to eventually take its toll as banks are already cutting back on their extensions of consumer credit."
Economists had forecast the report would show an increase of $5.9 billion in consumer debt in February, according to the median of 35 estimates in a Bloomberg News survey.
The sagging labor market is hurting household finances. Employers cut 80,000 jobs in March - the most in five years - and the unemployment rate hit 5.1 percent, the highest since September 2005. The economy also lost jobs in January and February, according to the Labor Department.
Revolving debt such as credit cards rose $4.7 billion during February, compared with $5.6 billion in January and $3.4 billion a year ago, the report said.
Nonrevolving debt, including auto loans, increased $497 million in February, after a $4.7 billion jump the prior month and a rise of $3.2 billion in February 2007, the Fed said.
According to the Fed's figures, consumer borrowing increased at a 2.4 percent annual rate after rising at a 4.9 percent pace during January.
In February, spending rose at the slowest pace in more than a year, an increase of 0.1 percent, according to a March 28 report by the Commerce Department.
According to a survey by the American Bankers Association released April 3, consumers fell behind on credit-card, home-equity, and auto loans at the fastest pace in 15 years during the fourth quarter of last year.
