In a surprising turn, growth in consumer credit significantly underperformed expectations in March, according to the latest report from the Federal Reserve. The increase was notably less robust compared to previous months, pointing to possible shifts in consumer behavior amid economic uncertainties.
By the numbers: Overall, consumer credit only rose by $6.3 billion in March, reaching a total of $5.059 trillion. This increase is a stark downturn from the $15 billion jump observed in February and falls short of the $15 billion economists had anticipated for March.
Credit trends: The growth in credit card debt was almost negligible, increasing just 0.1% in March, a sharp decline from the 9.7% surge seen in February. This marks the smallest monthly rise since April 2021. On the other hand, nonrevolving loans, which include student and auto loans, saw a healthier increase of 2% following a 1.4% gain in February.
Behind the numbers: Analysts are grappling with whether the slowdown in borrowing is due to consumers being wary of accumulating too much debt amidst economic uncertainty, or if it reflects the impact of recent wage growth enabling consumers to rely less on borrowing.
The big picture: This marked slowdown in consumer credit expansion might suggest a more cautious stance from consumers as they navigate the complexities of an uncertain economic landscape. The data could influence future monetary policy decisions as the Federal Reserve continues to monitor economic indicators closely.