The numbers: The amount of credit consumers used in December rose by a scant 2.9% — the smallest uptick in more than two years — as Americans tightened their belts in response to a slowing economy. Consumer credit rose by $11.6 billion in the final month of 2022, Federal Reserve data showed. Economists had expected a $26 billion increase, according to the Wall Street Journal forecast.

How much credit households use is seen as cue on the strength of the economy. Consumers tend to borrow more when times are good and cut back when the economy is weak. Key data: Revolving credit, like credit cards, increased at a 7.3% annual rate in December. That’s the smallest increase in a year and a half. Auto and student loans, known as non-revolving credit, rose at a 1.5% pace. That category of credit is much less volatile, but it’s the smallest increase since the early stages of the pandemic in 2020. The report does not include mortgages, the largest category of household debt. Big picture: The sharp slowdown in credit use at the end of 2022 suggests Americans were more worried about the economy. The Federal Reserve is raising interest rates aggressively to tame high inflation, but rising borrowing costs also threaten to plunge the economy into a second recession in four years. Market reaction:  The Dow Jones Industrial Average
the S&P 500 index
rose in Tuesday trades.

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