WASHINGTON – Americans increased their borrowing by $11.6 billion in March as a big increase in the category that covers auto and student loans offset the largest monthly drop in credit card borrowing in more than five years.
The Federal Reserve says the March increase in total debt was below the $13.6 billion increase in February and was the smallest monthly gain since September. Borrowing for student and auto loans rose a solid $14.2 billion, the third straight month of $14 billion-plus gains.
However, borrowing in the category that covers credit cards fell for a second straight month, dropping $2.6 billion following a decline of $514.5 million in February. The March contraction in credit card debt was the biggest since a $4.4 billion fall in December 2012.
Consumer borrowing trends are closely monitored for clues they can provide about the willingness of consumers to borrow more to support their spending. Consumer spending accounts for 70 percent of economic activity.
A sharp slowdown in consumer spending in the first three months of the year contributed to slower growth in the overall economy, as measured by the gross domestic product. The GDP grew at a 2.3 percent annual rate in the January-March quarter. But analysts believe signs are pointing to stronger consumer spending in the current April-June quarter and are forecasting that GDP will rebound to around 3 percent in this quarter.
The borrowing gains pushed the monthly consumer debt total to a fresh record of $3.87 trillion. The monthly borrowing report does not include mortgages or any other debt secured by real estate such as home equity lines of credit.