Con­sumer bor­row­ing in U.S. makes big­gest jump in nearly a year

Houston Chronicle - - BUSINESS - By Josh Boak

WASH­ING­TON — Amer­i­cans boosted their bor­row­ing by 7.73 per­cent 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 be­cause of a 10.75 per­cent jump in re­volv­ing credit, a cat­e­gory that in­cludes credit cards. Non-re­volv­ing credit, which in­cludes auto loans and stu­dent debt, rose 6.67 per­cent.

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 re­cent stock mar­ket de­clines. The un­em­ploy­ment rate has held at 3.7 per­cent, the low­est in nearly a half­cen­tury.

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.

Matt Rourke / As­so­ci­ated Press

Much of the rise in bor­row­ing was be­cause of a 10.75 per­cent jump in re­volv­ing credit.

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