WASHINGTON – American consumers boosted their borrowing in September, a potential sign that recent job growth and wage gains have left them slightly more comfortable with holding debt.
The Federal Reserve said Monday that total consumer borrowing rose $19.3 billion in September to $3.7 trillion outstanding. Consumer debt has climbed at an annual pace of 6.3 per cent, slightly below the growth rates seen in 2014 and 2015.
Revolving credit, which covers credit cards, posted an annual gain of 5.2 per cent to $978.8 billion. The non-revolving category, which includes auto and student loans and makes up the bulk of consumer debt, has risen 6.7 per cent over the past year to $2.7 trillion.
Roughly 70 per cent of U.S. economic activity comes from consumers, so the increase in borrowing suggests that spending will keep aiding growth.
The economy expanded at an annual pace of 2.9 per cent during the third quarter, its healthiest growth rate in two years. The troubled export sector recovered and companies started to restock their shelves in anticipation of greater consumer demand.
Much of the optimism has come from consistently solid hiring.
Employers added 161,000 jobs in October, a steady pace that contributed to average hourly earnings accelerating 2.8 per cent in the past year. The unemployment rate ticked down to 4.9 per cent.