Americans took out more loans to buy cars and attend school in February, but used their credit cards less frequently for the second straight month.
The US Federal Reserve on Friday said that consumers increased borrowing by US$8.7 billion, the sixth straight monthly increase.
The jump in borrowing was driven by an US$11 billion increase in the category that mostly measures demand for auto and student loans. Borrowing on credit cards fell by US$2 billion after a US$3 billion decline in January.
Total consumer borrowing rose to seasonally adjusted US$2.52 trillion. That’s nearly at pre-recession levels and up from a post-recession low point of US$2.39 trillion reached in September 2010. Borrowing had tumbled for more than two years during and immediately after the recession.
Consumer borrowing rose by US$18.6 billion in January, following similar gains in December and November. The gains for those three months were the largest in a decade.
A rise in borrowing could suggest that consumers are feeling more confident about the economy. However, few are comfortable enough to step up credit card use. Consumers carried US$799 billion in credit card debt in February — 15 percent less than they held in December 2007, the first month of the Great Recession. And student loan debt surpassed the US$1 trillion mark for the first time at the end of last year.
Steven Wood, chief economist at Insight Economics, said February’s borrowing increase was strong. However, he said that it was the smallest increase since October.
“Consumers still appear to be reluctant to use their credit cards,” Wood said in a note to clients.
Other analysts said Americans might be opting to use cash instead of credit cards as a way to continue paying down their debt. Consumer spending rose in February by the most in seven months.
Most consumers spent more of what they earned. The saving rate dropped to 3.7 percent of after-tax income in February. That was the lowest level since August 2009 and a full percentage point lower than all of last year.
Consumers are also taking on more debt at a time when their wages have not kept pace with inflation.
The outlook for the economy looked a little less rosy on Friday after the government said hiring slowed sharply last month.
Many economists blamed seasonal factors for much of Friday’s disappointing jobs report from the Department of Labor. Even with the pullback, the economy has added an average of 212,000 jobs per month from January through last month.
Households began borrowing less and saving more when the recession began and unemployment surged. While the expectation is that consumers are ready to resume borrowing, they are not expected to load up on debt the way they did during the housing boom of the last decade.
The Federal Reserve’s borrowing report covers auto loans, student loans and credit cards. It excludes mortgages, home equity loans and other loans tied to real estate.