by Martin Crutsinger
Associated Press Writer
WASHINGTON (AP)—U.S. consumers swiped their credit cards more often in March after cutting back during the previous two months. The increase helped drive overall borrowing up by the most in more than a decade.
Total consumer borrowing rose $21.4 billion in March, the Federal Reserve said Monday. That’s the seventh straight monthly increase and the largest since November 2001.
A measure of auto and student loans increased $16.2 billion. A separate gauge of mostly credit card debt rose $5.2 billion after declining in January and February.
The increase pushed total borrowing up to a seasonally adjusted $2.54 trillion. That’s slightly below the all-time high of $2.58 trillion reached in July 2008, eight months after the Great Recession began. Consumers then cut back on borrowing sharply for more than two straight years.
Americans began taking on more debt again in the fall of 2010 and have stepped up borrowing in recent months.
The steady rise in borrowing is generally considered a good sign for the economy. It suggests consumers are more confident and comfortable taking on more debt.
The overall economy grew at an annual rate of 2.2 percent in the January-March quarter. Consumer spending accounts for 70 percent of economic activity.
Still, job growth has slowed sharply in the past two months and wages have lagged inflation, raising concerns that consumers might pull back on spending later this year.
Employers added just 115,000 jobs in April, the government said Friday.
The employment report also noted that the average worker’s hourly pay rose by just one penny in April. Average hourly pay has ticked up 1.8 percent But inflation has been roughly 2.7 percent.
While the expectation is that consumers are ready to resume borrowing, they are not expected to load up on debt the way they did during the housing boom of the last decade.
The Federal Reserve’s borrowing report covers auto loans, student loans and credit cards. It excludes mortgages, home equity loans and other loans tied to real estate.