Consumers increased their borrowing by $18.2 billion in October to a seasonally adjusted $3.08 trillion, the Federal Reserve reported Friday. That is a record level and follows a September increase of $16.3 billion.
The increase was led by a $13.9 billion rise in borrowing for auto loans and student loans. But borrowing in the category that covers credit cards rose by $4.3 billion following a decline of $218 million in September. It was the biggest monthly credit card gain since May and could be a sign that consumer spending will increase in coming months. Credit card borrowing has lagged other types of debt.
Through October, the measure of auto loans and student loans has risen 6.2 percent from a year ago and has increased in every month but one since May 2010. But credit card debt is up just 1 percent from where it was a year ago. And it is 16.1 percent below its peak hit in July 2008 -- seven months after the Great Recession began.
Slow job growth and small wage gains have made many Americans more reluctant to charge goods and services.
But at the same time, the weak economy is persuading more people to go back to school to learn new skills. The Federal Reserve Bank of New York quarterly report on consumer credit shows student loan debt has been the biggest driver of borrowing since the Great Recession officially ended in June 2009.
Analysts are hoping that consumers will step up spending and help drive faster economic growth. The overall economy grew at an annual rate of 3.6 percent in the July-September period, according to a revised estimate released Thursday, up from growth of 2.5 percent in the April-June period.
However, about half of the third-quarter growth came from a huge increase in the buildup of business stockpiles. That is not is expected to last and slower inventory building is likely to contribute to weaker economic growth of less than 2 percent in the current October-December quarter.
The Fed's borrowing report tracks credit card debt, auto loans and student loans but not mortgages, home equity loans and other loans.
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