WASHINGTON (AP) — Americans boosted their borrowing by 7.73% in October from a year ago, the largest increase in nearly a year as consumer spending has helped fuel U.S. economic growth.
The Federal Reserve said Friday that consumer borrowing rose by a seasonally adjusted $25.3 billion in October to a total of $3.96 trillion. The October increase was the most since November 2017 and more than double the gain in the prior month.
Much of the increase was due a 10.75% jump in revolving credit, a category that includes credit cards. Non-revolving credit — which includes auto loans and student debt — rose 6.67%.
Economists and investors monitor consumer borrowing to judge the willingness of people to take on debt to finance their purchases. Higher debt can suggest that people are confident in their ability to repay their loans.
Consumer spending accounts for 70 percent of economic activity. The economy grew at an annual pace of 3.5 percent in the July-September quarter, aided by the biggest surge in consumer spending in four years.
Many Americans have reasons to be confident despite the recent stock market declines. The unemployment rate has held at 3.7 percent, the lowest rate in nearly a half-century.
The Fed's consumer borrowing report does not cover home mortgages or other types of debt secured by real estate such as home equity loans.