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December consumer credit rises less than expected

Tuesday, Feb. 8, 2005 | 9:22 a.m.

December consumer borrowing increased less than expected after the Federal Reserve raised interest rates five times in the last half of 2004.

Borrowing through charge cards, car loans and other nonmortgage debt rose by $3.1 billion to $2.104 trillion, from a revised gain of $2 billion in November that was first reported as a decline, the Fed said today in Washington. Borrowing rose by $14.1 billion in October and by $17 billion in September.

"Households have become increasingly hesitant to tap even deeper into consumer debt," said Stephen Wood, principal economist at Insight Economics LLC in Danville, California. "As mortgage refinancing opportunities become scarcer, households will either have to resort to more consumer debt or bring their spending back into line with their more slowly growing income."

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