WASHINGTON: Borrowing by Americans fell in January for the first time in five months, as a big drop in the use of credit cards offset increases in auto loans and student loans.
The Federal Reserve reported Friday that consumer borrowing fell by $1.3 billion in January, the first setback since a $9 billion decline in August.
The weakness came from a $9.9 billion decline in borrowing in the category that covers credit cards. It marked the fourth straight decline in that category and was the biggest drop since a $10.8 billion fall in August.
The category that covers auto and student loans posted an $8.6 billion increase in the first month of 2021, following an even bigger gain of $11.6 billion in December.
Consumer borrowing is closely watched for indications about Americans’ willingness to take on more debt to finance their spending, which accounts for two-thirds of U.S. economic activity.
Since the pandemic hit a year ago, millions have lost their jobs and households have grown more cautious, boosting their savings levels as a hedge against economic uncertainty.
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