Consumer borrowing increased less than expected in December after the Federal Reserve raised interest rates five times in the last half of 2004.
The Fed said Monday that borrowing through charge cards, car loans and other non-mortgage debt rose by $3.1 billion, or 1.8 percent, to $2.104 trillion, from a revised gain of $2 billion in November that was first reported as a decline. Economists expected an increase of $8 billion in December.
Borrowing slowed as the Fed raised rates to 2.25 percent in December from 1 percent in June to stem inflation. It raised rates another quarter of a percentage point this month and said further increases may come at a “measured” pace.
“That’s certainly sending a signal that consumers were a little bit spooked in the late innings of ’04,” said Richard Yamarone, chief economist at Argus Research Corp. in New York. “It certainly paints a less than enthusiastic picture of consumption.”
