WASHINGTON (AP) â¿¿ Consumers likely increased their borrowing in December, helped by gains in auto loans and student loans.
Economists forecast that consumer borrowing rose by $14.4 billion in December, compared to November, according to a survey by FactSet. The Federal Reserve will release the report at 3 p.m. EST Thursday.
In November, consumers increased their borrowing by $16 billion to a seasonally adjusted record of $2.77 trillion.
The November gain was led by a big rise in borrowing that covers autos and student loans. The category that covers credit card debt rose but by a much smaller amount.Credit card debt has risen only modestly over the past two years. Consumer confidence fell sharply in December, a drop that was blamed in part about worries over whether Congress and President Barack Obama would be able to reach a budget deal to avert sharp increases in taxes and across-the-board government spending cuts. An agreement was reached but the deal did not prevent Social Security taxes by rising by two percentage points, an increase that will reduce take-home pay by $1,000 this year for a worker making $50,000. Analysts expect that the trends apparent in 2012 in consumer borrowing will be maintained in 2013 with solid gains in auto loans and student loans but weaker growth in credit card debt. They say that consumers are now willing to take on more debt, but slow wage growth and still-high unemployment will make many households leery of taking on too much debt. 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. The overall economy actually shrank in the October-December, dipping at an annual rate of 0.1 percent, the first quarterly decline since the recession was ending in the summer of 2009.