Americans’ nonmortgage debt grew in November at the slowest pace in six months, a sign consumers may have been cautious about spending during the holidays.
Total consumer credit, which excludes real-estate loans such as mortgages, grew at a 4.8% annual rate in November from a month earlier, the Federal Reserve said Wednesday. That was slower than October’s 7% pace and the smallest increase since April.
The weaker growth largely reflected consumers reining in credit-card borrowing. So-called revolving credit grew at a 0.6% rate in November, down from a sharp 5.6% rise in October.
Nonrevolving credit, which largely reflects student and auto loans, continued to climb at a solid pace, though it too slowed from prior months. Such credit grew at a 6.4% pace in November after consistently rising above a 7% pace over the summer.
Consumer credit can be a leading indicator of overall consumer spending, a key driver of the U.S. economy. Americans are generally willing to build credit-card debt more when they are confident about the economy and their own finances.
Households have shored up their finances during the recovery, with average debt payments as a percentage of disposable incomes now at historically low levels. But Americans have shown a reluctance to build their debts amid modest gains in the labor market.
Other reports show households stepped up spending throughout the second half of 2013, though at a modest pace, as job growth picked up. A Commerce Department report last month showed consumer spending rose in November at the highest pace since June. But wage gains were weak, and many households cut into their savings.
Americans’ spirits have been boosted in recent months by the surging stock market, rising home values and a decline in gasoline prices. But some economists say spending likely won’t hold up at current levels this year unless workers secure larger wage gains.