(Bloomberg) — US consumer borrowing increased in October by more than forecast, reflecting the largest advance in credit-card balances since mid-2022.
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Total credit outstanding rose $19.2 billion after a revised $3.2 billion September increase, according to Federal Reserve data released Friday. The median estimate in a Bloomberg survey of economists called for a $10 billion gain. The figures aren’t adjusted for inflation.
Revolving debt outstanding, which includes credit cards, surged $15.7 billion. October included Amazon.com Inc.’s Prime Day, as well as similar promotions at Walmart Inc. and Target Corp.
Non-revolving credit, such as loans for vehicle purchases and school tuition, increased $3.5 billion, the Fed’s report showed. The pace of auto sales during the month was the strongest in more than three years, according to Ward’s Automotive Group data.
While the Fed has lowered its benchmark rate by 0.75 percentage point since September, it will take time to filter through into cheaper financing costs for consumers.
While rising incomes have allowed many consumers to manage the high cost of borrowing, many lower-income Americans are experiencing greater financial strain. Fed Chair Jerome Powell alluded to that earlier this week, noting that aggregate US economic data look good but there’s pressure in lower-income brackets.
A New York Fed report in November showed that 3.5% of outstanding consumer debt was in some stage of delinquency in the third quarter, up from 3.2% in the previous three-month period. The share of auto loans that transitioned into serious delinquency, meaning payments were at least 90 days late, rose to 2.9%.
—With assistance from Chris Middleton.
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Source: US consumer borrowing jumps on surge in credit-card balances
