WASHINGTON (AP) — U.S. consumer borrowing rose by a strong $25.8 billion in March, the second month in a row of sizable gains and a further indication that the economic recovery is picking up steam.
The March gain reported Friday by the Federal Reserve followed an even larger $26.1 billion consumer-borrowing rise in February. The two monthly increases were the biggest gains since a $26.8 billion increase in December 2019, before the pandemic hit.
The March borrowing advance reflected a $6.4 billion increase in the category that includes credit cards and a $19.4 billion rise in the category that covers auto loans and student loans.
Consumer borrowing is watched closely for signals it can send about households’ willingness to borrow to finance their spending. Consumer spending accounts for two-thirds of U.S. economic activity.
The February and March increases in the credit card category followed four consecutive months in which credit card borrowing had fallen. Even with the recent gains, total debt in the credit card category of $980 billion is down 9% from the level in March 2020.
Total debt in the Fed’s monthly stood at a record $4.24 trillion in March.
The Fed’s monthly report does not cover mortgage loans or any other debt secured by real estate such as home equity loans.