WASHINGTON (AP) _ Americans increased their borrowing at the fastest pace in four months in January as unusually mild weather during the month encouraged shoppers to head for the malls and use their credit cards.
The Federal Reserve reported Tuesday that consumer credit grew at an annual rate of 2.2 percent in January, up from a 1.9 percent rate of increase in December. It was the best showing since consumer credit grew at a 3.1 percent pace in September.
Economists had expected an acceleration in borrowing during the month, reflecting a strong rise in retail sales that had been powered by the warmest January in more than a century.
Consumer borrowing had actually posted back-to-back declines in October and November as people tried to regain their footing after a big jump in energy prices caused by the Gulf Coast hurricanes.
The Fed reported that the 2.2 percent increase in the rate of borrowing in January pushed total consumer credit to $2.162 trillion in January at an annual rate, up by $3.93 billion from the December level.
The increase was led by a 2.6 percent rise in the pace of borrowing on credit cards and other kinds of revolving debt, a big turn-around from December when this category had actually declined by 0.9 percent.
Borrowing on auto loans and other kinds of non-revolving debt rose at a 1.9 percent rate in January following a sizable 3.5 percent rate of increase in December.
Economic growth in the final three months of 2005 slowed to an annual rate of just 1.6 percent, the slowest pace in three years, as the economy was hit by the disruptions caused by the Gulf Coast hurricanes and a resulting surge in energy prices.
But economists are looking for a sizable rebound in growth in the January-March quarter as consumer spending rebounds. Some analysts believe that growth could go above a rate of 5 percent.