U.S. consumer borrowing rose in October to the highest level in two years, propelled by gains in non-revolving debt like auto and student loans.
Credit increased by $7.65 billion to $2.46 trillion, the most since October 2009, Federal Reserve figures showed today in Washington. The advance was in line with the median forecast of economists surveyed by Bloomberg News that projected a $7 billion gain.
The data indicate consumers are relying more on credit to sustain spending as income gains fail to keep up with inflation and home prices drop. At the same time, increasing employment may be making Americans more willing to take on more debt heading into the holiday shopping season.
“It’s hard to determine whether spending on credit is a sign of optimism or a sign of distress, but just anecdotally we feel there is the beginning of tentative feelings of comfort in taking on slightly more debt,” said Dana Saporta, a U.S. economist at Credit Suisse in New York.
Estimates in the Bloomberg survey of 34 economists ranged from gains of $1 billion to $16 billion.
Revolving debt, which includes credit cards, climbed by $366.2 million in October, according to the Fed’s statistics.
Non-revolving debt, including educational loans and loans for autos and mobile homes, increased by $7.28 billion in October, today’s report showed. The Fed’s report doesn’t track debt secured by real estate, such as home equity lines of credit.
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