Consumer borrowing in the U.S. picked up in October from a month earlier, although the pace of the acceleration was slightly less than economists expected.
Total credit to the U.S. household sector, excluding mortgages, increased by $27.1 billion from the prior month after rising almost $26 billion in September, Federal Reserve figures showed Wednesday. The median forecast in an Econoday survey of analysts penciled in a $27.3 billion increase.
This represents an annualized rate of growth of 6.9 percent, which is above the rate of inflation. That is above the 6.6 percent rate of growth recorded in September but below the August growth rate of 7.8 percent. It is also below the quarterly rates in the first three quarters of the year and matches the fourth quarter rate of growth last year.
Revolving credit
Revolving credit outstanding, which is primary credit card debt, increased $10.1 billion, an annual rate of growth of 10.4 percent. That is above the level of inflation, indicating real growth in credit card spending. That could mean consumers are spending more for the holidays despite widespread expectations of a recession. It could also mean that some households are increasingly turning to their credit cards to make ends meet.
Revolving credit debt has grown rapidly since last summer but only passed its pre-pandemic peak in May. It is still below the pre-pandemic trend.
Non-revolving credit, mostly student loans and auto loans, rose $17 billion. This category tends to be less volatile than revolving loans. Its annual growth rate is 5.8 percent.
Interest rates on credit cards have risen this year as the Fed hiked rates, although not at the rate that mortgages have increased. The average rate charged to borrowers with credit balances in August, the most recent date for which data is available, was 18.43 percent. Last year it was 16.45 percent.