WASHINGTON – U.S. consumers in December increased their borrowing at the fastest pace in three months. The result suggests that consumer spending should remain strong in the coming months.
Borrowing expanded $21.3 billion in December, the strongest showing since an increase of $28.6 billion in September, the Federal Reserve reported Friday. That pushed total borrowing to a fresh record of $3.55 trillion.
Borrowing in the category that covers credit cards rose $5.8 billion, slightly below the November gain. Borrowing in the category that covers auto and student loans jumped $15.4 billion in December, notably higher than the November gain of $7.7 billion.
Consumer spending, which accounts for 70 per cent of economic activity, is expected to accelerate this quarter after slowing in late 2015.
The overall economy grew at a lacklustre annual rate of just 0.7 per cent in the October-December period as consumer spending slowed to a growth rate of 2.2 per cent. Economists are looking for further gains in employment to bolster spending in the current quarter.
In its monthly credit report, the Fed does not break down auto loans and student loans in the seasonally adjusted data. The report excludes borrowing that is backed by real estate such as mortgage loans and home equity loans.