U.S. consumer borrowing accelerated in February and consumers started to use their credit cards again as economy recovered from the coronavirus pandemic, according to Federal Reserve data released Wednesday.
Total consumer credit at a 7.9% an annual growth rate, after remaining flat in January.
Economists has been expecting a much smaller increase, according to a survey of economists conducted by the Wall Street Journal.
Revolving credit, like credit cards, jumped at a 10.1% rate, reversing last month’s 10.6% decline. That’s only the second month credit card balances had increased since the pandemic began.
T.J. Connelly, head of research at Contingent Macro, said some of the increase was likely due to the severe cold weather in February. Consumers tend to use the credit cards more during emergencies, he said.
Nonrevolving credit, typically auto and student loans, rose 7.3% in February after a 3.3% rise in the prior month. This category of credit is much less volatile. It only fell briefly at the start of the pandemic before returning to steady growth.
The data does not include mortgage loans, which is the largest category of household debt.
Fed Governor Lael Brainard said easy financial conditions engineered by the central bank are clearly supporting the economy.
“If you look at consumer credit – it was really strong there,” Brainard said in an interview with CNBC.
“We are seeing the kinds of financial conditions broadly that are very consistent with supporting the flow of credit to businesses and to households,” Brainard said.
Stocks were mixed Wednesday with the Dow Jones Industrial Average
down 20 points in late day trading.