U.S. Consumer Credit Jumped in February Before Virus Hit
(Bloomberg) -- U.S. consumer debt grew in February by the most in seven months on a pickup in non-revolving loans, just before the coronavirus pandemic began to test the viability of household finances.
The $22.3 billion increase in total credit from the prior month followed a revised $12.1 billion January gain, Federal Reserve figures showed on Tuesday. The median estimate in a Bloomberg survey of economists was for a rise of $14 billion. Non-revolving debt, which includes auto and school loans, rose by $18.1 billion -- the most since 2015 -- while revolving or credit-card debt was up $4.2 billion.
The global health crisis that’s shuttered thousands of businesses and forced millions out of work has quickly spawned financial hardships for many Americans. Faced with questionable incomes and notwithstanding government financial-relief efforts, consumers are likely to cut back on purchases and borrow less.
For the past several years, household credit was expanding at about the same pace as it was prior to the last recession. As the 2007-2009 downturn became more pronounced, consumer sharply reduced their borrowing. The current economic stop will probably encourage similar behavior.
Total consumer credit for the month expanded an annualized 6.4% after growing 3.5% in January. The Fed’s report doesn’t track debt secured by real estate, such as home mortgages.
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