MW American consumers borrowed a lot less in January

By Greg Robb

Borrowing drops to a 4.4% annual growth rate, about half the strong December gain

The numbers: Total consumer credit rose $18.1 billion in January, down from $37.1 billion in the prior month, the Federal Reserve said Friday.

That translates to a 4.4% annual growth rate - down from the 8.7% rate in December, which was the largest since June 2022.

Key details: Revolving credit, like credit cards, rose at an 8.2% rate in January, after an 18.5 % gain in the prior month.

Nonrevolving credit, typically auto and student loans, rose by 3% after a 5.2% rise in the prior month. This category of credit is typically much less volatile.

The Fed's data does not include mortgage loans, which are the largest category of household debt.

Big picture: Households are less insulated from economic shocks with less savings on hand and less available credit, said Elizabeth Renter, senior economist at NerdWallet.

Elevated prices have strained low- and middle-income Americans, economists said.

"The economy is 'K-shaped' but not particularly fragile. To put it simply, current economic conditions are significantly more favorable for the top 50% of the income distribution than they are for the bottom 50%," said Tom Simons, economist at Jefferies.

Market reaction: Stocks SPX DJIA COMP closed higher while the 10-year Treasury yield BX:TMUBMUSD10Y inched up on Friday.

-Greg Robb

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March 07, 2025 17:20 ET (22:20 GMT)

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