Consumers' borrowing pace slows

/ Source: The Associated Press

Americans increased their borrowing at the slowest pace in three months in February as retail sales retreated after a weather-induced surge in January.

The Federal Reserve reported that consumer borrowing rose at an annual rate of 1.8 percent in February, down from a 3.4 percent rate of increase in January.

Analysts had expected the slowdown given how strong the previous month had been. Retail sales had surged in January, reflecting unusually warm weather during the month that drew shoppers to the malls.

The 1.8 percent rise in borrowing pushed total consumer credit up by $3.26 billion, about in line with Wall Street expectations, after a gain of $6.14 billion in January.

The latest increase left total consumer credit as measured by the Fed at a record of $2.16 trillion. The Fed does not include mortgages or other loans secured by real estate in its measurements.

For February, the category that includes credit card debt rose by 1.2 percent, down from a gain of 3.3 percent in January.

Non-revolving debt, the category that includes auto loans, rose by 2.2 percent in February after a gain of 3.5 percent in January.

The $6.1 billion rise in overall borrowing in January represented a large upward revision from an initial estimate that borrowing had grown by $3.9 billion during the month.

Total consumer spending rose by just 0.1 percent in February, the weakest showing in six months. But economists believe this reflected a payback from an exceptionally strong January.

They are forecasting that consumer spending, bolstered by good job gains, will show strong momentum in coming months, helping to keep the overall economy growing at a solid pace.

The Labor Department reported Friday that the economy created 211,000 jobs in March, helping to push the unemployment rate down to 4.7 percent.