Consumer Debt Rises $17B on Credit-Card Borrowing

U.S. consumer debt picked up in January as Americans tapped credit cards after the holidays, suggesting support for spending at the start of the year following a weak December.

Total credit rose $17 billion from the prior month, matching the median estimate of economists, following a downwardly revised $15.4 billion gain in December, Federal Reserve figures showed Thursday.

Revolving debt outstanding increased at a faster pace while the rise in non-revolving credit was little changed.

Key Insights

• The data suggest consumers remained ready to borrow at the start of the year, with activity propelled by the strong labor market, higher wages and tax cuts. In addition, the Fed's patience on raising interest rates may encourage lending.
• Consumers likely helped keep the economy humming during the month, though analysts expect consumption to cool in 2019. Retail sales are projected to have rebounded in January data due Monday, following a surprise plunge in December that contrasted with other, more positive data.
• Credit expanded at an annual rate of 5.1 percent in January, following 4.6 percent in the prior month. A separate Fed report earlier Thursday showed it expanded in the fourth quarter at a 6.2 percent pace, faster than the prior three months. 
• Revolving credit outstanding, which includes credit card debt, increased $2.57 billion in January after a $939 million gain. December's figure was originally reported as a $1.74 billion increase.
• Non-revolving debt outstanding rose $14.5 billion after a $14.4 billion increase. Such debt includes loans for school and automobiles. Other data showed sales of vehicles slowed in January and February.
• Lending by the federal government, which is mainly for student loans, rose by about $26.6 billion before seasonal adjustment.
• The central bank’s consumer credit report doesn’t track debt secured by real estate, such as mortgages and home equity lines of credit.