U.S. consumer borrowing
rose more than expected in September as Americans took on more
credit card, auto-loan and other debt, the Federal Reserve said.
Personal debt, excluding mortgages, rose at a 6.9
percent annual rate, or $10 billion, in September, the Fed said.
Economists expected a $5.5 billion increase. In August, debt rose
at a 3.9 percent rate, or by $5.6 billion.
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The increase in credit mainly reflects higher September auto
sales, fueled by zero-interest loans and other discounts. Such
incentives, coupled with modest income growth and low interest
rates, are giving consumers the means to spend. This should help
the recovery, economists said, because consumer spending accounts
for more than two-thirds of the economy.
“Consumers are leaning a little bit heavily on credit to
support their buying habits,” said Astrid Adolfson, an economist
at MCM MoneyWatch in New York. Right now, this “obviously
supports the economy.”
Economists expectations for September borrowing were based on
the median of 37 forecasts in a Bloomberg News survey. Consumer
debt in September totaled $1.733 trillion, up from $1.723 trillion
in August.
The Fed’s consumer credit report doesn’t include loans
secured by real estate, such as mortgages and home-equity lines of
credit. Mortgage debt is more than four times the amount of credit
card debt, auto loans and other personal borrowing.
Fed policy makers, who met yesterday, lowered their benchmark
interest rate by half percentage point to 1.25 percent, the lowest
since July 1961. The rate cut, intended to restore momentum to the
recovery, may spur consumers to borrow more and continue spending,
buoying the economy.
Bloomberg News
