Consumers Ratchet Up Borrowing .
Consumers added to their non-mortgage debts for the fourth straight month in January, suggesting that the U.S. economy owes its recent acceleration in part to renewed borrowing. Consumer credit, which excludes real estate loans such as home mortgages, grew at a 2.5% annual pace to $2.4 trillion, the Federal Reserve said Monday. A nearly 7% increase in non-revolving credit—including loans for autos, boats and education—drove the gains, while credit-card debt fell to a new six-year low as consumers continued to pay down debt or default on loans. The increase in overall credit comes at a time when U.S. consumers have been ramping up their purchases of big-ticket items such as new cars,supra encouraged by extremely low rates on financing. Light-vehicle sales in January and February combined rose to about 1.8 million, up 22.5% from the same period a year earlier, according to Ward's AutoInfoBank. Meanwhile, the relatively weak economy may have also led consumers to rely more on loans in some areas. For instance, federal student loans jumped in January to drive much of the increase in non-revolving credit. Gregory Daco, an economist at consultancy IHS Global Insight, said the rebound in non-revolving credit is likely to spread to credit cards as consumers' animal spirits return. "Strong demand for credit for automobiles is a good sign of consumer spending," he said. "We might see a few more drops in revolving credit over the coming months, but there is evidence that we're at a turning point." Revolving consumer credit—consisting largely of credit-card debt—declined at an annual rate of 6.4% to $795.5 billion, down from a peak of $974 billion in August 2008. The cutbacks in credit-card debt reflect consumers choosing to pay down debt and lenders writing off overdue balances. Credit-card borrowing fell consistently starting in September 2008, as the financial crisis struck and consumers reined in their spending after years of relying heavily on plastic. It rose in December before dropping again amid the snowy and cold weather of January.