Number: The Federal Reserve said on Tuesday that total US consumer debt rose by $14.8 billion in January, up from $10.7 billion in the previous month. That translates to a 3.7% annual rate of return, which is higher than the revised 2.7% gain in the prior month.
Economists estimated a $25 billion gain in consumer debt in January, according to Wall Street Journal forecasts.
The December increase in borrowings was the smallest monthly increase since November 2020.
Main details: Revolving credit, like credit cards, grew 11.1% in January, up from 6.9% in the previous month.
Nonconvertible loans, typically auto and student loans, eased 1.2% from a 1.3% increase in the previous month. This category of credit is much less volatile.
The Fed’s data does not include mortgage loans, the largest category of home debt.
big picture: On Monday, JPMorgan Chase CEO Jamie Dimon said consumers still have plenty of money left over from pandemic aid. “They’re spending it, the jobs are plentiful.” They said.
Scott Murray, an economist at Nationwide, said inflation is taking its toll on big-ticket purchases, while squeezed consumers are using credit cards.
Overall, consumers are shying away from auto loans.
What they are saying: “We do not expect the recent pace of growth in revolving credit to continue. While consumer spending began 2023 with a higher pace than expected, we expect a slower pace in consumer spending, higher interest rates and tighter lending standards will begin to constrain household borrowing,” said Nancy Vanden, principal US economist at Oxford Economics Houghton said in a note to customers.
Market Feedback: Stock DJIA,
The market closed on Tuesday after Fed Chair Jerome Powell was more bullish than expected. The yield on the 2-year Treasury note TMUBMUSD02Y,
rose 11 basis points to 5.02%.
Credit: www.marketwatch.com /