The Federal Reserve Board reported that consumer credit increased $17.8 billion in January to $2,512.3 billion. This is the fifth consecutive month of gains, with strong increases in the last three. This month’s advance stemmed entirely from higher nonrevolving loan amounts, as revolving credit fell by $2.9 billion in January. The largest increase among nonrevolving credit lines was for student loans from the federal government, up $27.9 billion. A drop in commercial bank loans was largely responsible for the decline in revolving credit, down $16 billion.
Overall, consumer credit is up 8.6 percent year-over-year. The surge in borrowing was mostly attributable to increased auto and student loans, with nonrevolving balanced up 14.7 percent since January 2011. Revolving loans, on the other hand, dropped 4.4 percent over the past year, reflecting weaker consumer spending recently.
Chad Moutray is chief economist, National Association of Manufacturers.