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Consumer Credit in U.S. Rose Less Than Forecast in February

U.S. consumer borrowing rose less than forecast in February, restrained by a drop in credit-card debt, according to a Federal Reserve report.

Credit increased $8.7 billion, the least in four months, after a revised $18.6 billion gain in January that was more than initially estimated, Federal Reserve figures showed today in Washington. Economists projected a $12 billion rise in the measure of revolving and non-revolving loans for February, according to the median forecast in a Bloomberg News survey.

Smaller gains in borrowing indicate American households are continuing to pay down debt or are less optimistic about their finances. Another report today showed the economy created fewer jobs than forecast in March, a sign it may take time before consumers become more comfortable taking on debt.

“Credit card borrowing has slowed down a bit,” Aneta Markowska, a senior U.S. economist at Societe Generale in New York, said before the report. “Clearly there was a run up in the past few months related to the holidays, and we’ve seen a pretty meaningful slowdown. The process of repairing consumers’ balance sheets still has farther to go.”

Estimates in the Bloomberg survey of 33 economists ranged from gains of $2 billion to $20 billion.

Payrolls climbed 120,000 in March, the smallest gain in five months, the Labor Department in Washington said today. The median forecast in a Bloomberg survey called for a 205,000 increase. The unemployment rate fell to 8.2 percent from 8.3 percent as people left the labor force.

The Fed’s statistics showed revolving debt, which comprises credit cards, fell $2.2 billion in February after a $3 billion drop a month earlier.

Non-Revolving Debt

Non-revolving debt, including educational loans and borrowing for autos and mobile homes, climbed by $10.9 billion in February, the smallest gain in four months, today’s report showed. The Fed’s report doesn’t track debt secured by real estate, such as home equity lines of credit.

Cars and light trucks sold at a 14.3 million annual rate in March, capping the strongest quarter in four years, according to data from Ward’s Automotive Group.

The increase in credit reflected a $300 million non- unadjusted rise to $453.3 billion in the federal government category of borrowing, which includes school loans and has shown bigger gains in recent months.

Even with the slowdown in March, job growth this year has been enough to boost spending. Purchases rose 0.8 percent, the most in seven months, Commerce Department data showed last week.

Consumer confidence is “getting a little better,” Michael Schlotman, chief financial officer at Kroger Co., the largest U.S. grocery chain, said during a March 28 conference. “People who want to spend a little bit more on things inside our store appear to be having a little more confidence, but more budget- minded customer continues to show significant signs of stress.”

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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