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TIGHTENING THEIR PURSE STRINGS: CONSUMERS PUT THE BRAKES ON CREDIT BALANCE GROWTH

Consumers reined in their credit spending in January.

In data released on Friday, the outstanding U.S. consumer credit balance USCRED=ECI grew by $18.08 billion, a 51.2% deceleration from December, but a more robust increase than the $14.50 billion analysts expected.

A closer look at the Federal Reserve's report shows the total non-revolving credit balance - which includes big-ticket items such as cars and tuition - grew by $9.10 billion, a 43.8% monthly slowdown.

The revolving credit balance - which includes credit cards - increased by $8.99 billion, or 56.9% less than December's gain.

The reason for the pull-back is likely at least partially attributable the arctic blast which subjected much of the country to an extended spate of frigid temperatures in the first few weeks of the year, along with the seasonal belt-tightening which often follows the Christmas holidays.

Since January, President Donald Trump's erratic on-again, off-again tariff wars, mass DOGE layoffs and immigration crackdown have brought uncertainties from simmer to boil.

As a result, consumer expectations have since deteriorated, the saving rate - a gauge of consumer anxiety - is up, retail sales have been disappointing and major retailers, including Walmart WMT.N and Target TGT.N have warned of softening consumer demand.

To cap it off, on Feb. 28 the Commerce Department reported the first monthly decline in personal expenditures in nearly two years.

So while this report harkens back to a time lower certainty, outstanding credit balances look set to fall, going forward.

Check this space a month from now.

(Stephen Culp)

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