WASHINGTON – Consumers pulled back on credit card debt in January, leading to the smallest increase in consumer borrowing in more than four years.
Total borrowing rose $8.8 billion in January compared to an increase of $14.8 billion in December, the Federal Reserve reported Tuesday. It was the smallest monthly gain since borrowing only went up $7.6 billion in July 2012.
The slowdown reflected a big reduction in the category that covers credit card debt, which fell $3.8 billion in January. It marked the first time credit card debt has declined since February 2016 and was the biggest reduction since October 2010.
Consumer borrowing is closely watched for signs of consumers' willingness to take on more debt to support their spending. Consumer spending accounts for 70 percent of economic activity.
Borrowing for auto loans and student loans rose $12.6 billion in January, slightly more than in December.
The $8.8 billion overall gain pushed consumer credit in the areas of auto and student loans and credit cards up to $3.77 trillion, a record high for the categories.
The Fed's monthly credit report does not cover mortgages or other debt secured by real estate such as home equity loans.
A separate survey by the Federal Reserve Bank of New York showed that total outstanding household debt, which does cover home mortgages, rose to $12.58 trillion at the end of last year. That's about $100 billion shy of the all-time high set in the third quarter of 2008, just before a financial crisis set off by sub-prime mortgages plunged the country into the worst economic downturn since the 1930s.
Although total household debt has nearly surpassed its 2008 peak, the composition has changed. Mortgage debt has been slow to recover, while student loans are playing an increasingly bigger role in total debt.