Consumer borrowing in the U.S. rose more than forecast in January, capping the biggest three-month gain in more than a decade, as demand for autos improved and Americans sought more education.
Credit increased by $17.8 billion to $2.51 trillion, Federal Reserve figures showed today in Washington. The gain topped the $10.5 billion median forecast of economists surveyed by Bloomberg News. In the three months to January, borrowing climbed by the most since mid 2000.
Improving finances as hiring strengthens may be allowing households to take on more debt in order to sustain spending on big-ticket items like automobiles. Nonetheless, a jobless rate exceeding 8 percent may be prompting other Americans to pursue higher education or specialized training to get a leg up in the job market.
“Consumer borrowing is back, fueled by a healthy interplay of rising demand for big-ticket items and relaxing credit standards,” said Richard DeKaser, deputy chief economist at Parthenon Group LLC in Boston. “We appear to be in the early stages of a virtuous cycle, where credit easing facilitates more spending.”
The median forecast for credit was based on a survey of 38 economists. Estimates ranged from increases of $5 billion to $20 billion. The Fed revised the December gain to $16.3 billion, down from a previously estimated $19.3 billion increase.
Non-revolving debt, including educational and auto loans increased by $20.7 billion in January, the biggest gain since November 2001, today’s report showed. The Fed’s data don’t track debt secured by real estate, such as home equity lines of credit.
Revolving debt, which includes credit cards, dropped by $2.95 billion, the first decrease since August, according to the Fed’s statistics.
Consumer confidence held close to an almost four-year high at the end of February as pessimism about the performance of the economy eased, according to a Bloomberg Consumer Comfort Index. The gauge was minus 38.8 in the period ended Feb. 26 after reaching minus 38.4, the highest level since April 2008, in the previous period.
For the fourth consecutive week, at least half the respondents viewed their personal finances as positive, a run that has been matched only once since 2008.
Americans are buying more cars as hiring and the economy improve. Sales of cars and light trucks rose 4.8 percent in January from the prior month to reach a 14.1 million annual pace, according to figures from Ward’s Automotive Group. Purchases climbed another 6.4 percent last month to a 15 million rate, the highest reading since February 2008.
Sales for General Motors Co., Chrysler Group LLC and Ford Motor Co. all beat the median forecast of analysts surveyed.
Payrolls grew by 210,000 workers in February after rising by 243,000 the prior month, according to the median forecast of economists surveyed by Bloomberg before a Labor Department report in two days. The jobless rate probably held at a three-year low of 8.3 percent, the report may also show.