Consumers borrowed more in January to purchase new cars but were once again frugal with their credit cards, offering a mixed sign of their confidence in the economy.
Borrowing rose 2.5 percent, or by $5 billion, the Federal Reserve said Monday. It was the fourth consecutive monthly gain and it increased total consumer debt to $2.41 trillion.
Strong car sales drove the increase. The category that includes auto loans rose 6.9 percent.
But credit card debt fell 6.4 percent in January _ the 28th decline in 29 months _ to lowest level since September 2004. Americans had increased their use of plastic in December for the first time since the financial crisis. But they cut back the following month, even though a Social Security tax cut is giving most households an extra $1,000 to 2,000 this year.
"People are still pretty cautious about using their credit cards," said David Wyss, chief economist at Standard & Poor's in New York. "We are coming out of a deep recession in which a lot of people got caught with too much debt."
Consumer debt is 0.7 percent above a three-year low hit in September. It is 6.6 percent below the peak hit in July 2008.
Analysts are predicting that consumers will borrow more in the months ahead, responding to the strengthening economy, a brighter outlook for jobs and the tax cut. But they said the increases will likely be gradual.
Michael Gapen, senior U.S. economist at Barclays Capital, said he expects consumer spending to grow as much as 3.5 percent in 2011, about double last year's gain.
"The passage of the tax package in December and the on-going improvement in labor market conditions will mean households will have more disposable income, which will help consumption," Gapen said.
The government reported Friday that the unemployment rate fell to 8.9 percent in February, the first time it has been below 9 percent in nearly two years.
Households began borrowing less and saving more as they struggled to cope with the deep 2007-2009 recession. People trimmed their spending when the unemployment rate began to rise.
The rise in auto loans marked the sixth consecutive month that this category has increased, reflecting a rebound in auto sales.
Even if economists' forecasts are accurate and borrowing does increase this year, analysts are not predicting that consumers will increase debt the way they had during the housing boom.
During that time, households felt wealthier because of soaring home values. But when home prices fell, they cut back on borrowing. And the trend accelerated after job losses mounted and many people struggled to get their debt under control.