Consumers boost borrowing $16 billion in October

WASHINGTON – Consumers increased their borrowing in October at the slowest pace in four months as growth in credit card debt and the category that covers auto loans and student loans slowed.

Total borrowing rose $16 billion after a $21.8 billion increase in September, the Federal Reserve reported Wednesday. The October increase was the smallest since a gain of $14.5 billion in June.

Revolving credit, which covers credit cards, increased $2.3 billion in October. That was after a $4.1 billion increase in September and was the smallest gain since February. The non-revolving category, which covers auto loans and student loans, rose $13.7 billion in October after a $17.7 billion rise in September.

Economists watch borrowing trends to gauge how consumer spending, which accounts for 70 per cent of economic activity, will fare.

The October borrowing increase was a gain of 5.2 per cent at an annual rate, well below the pace of the past two years. Borrowing rose 7.2 per cent in 2014 and 7 per cent in 2015.

Even with the slowdown, total borrowing rose to a fresh record of $3.73 trillion.

The Fed’s monthly consumer credit report does not cover home mortgages or other loans secured by real estate.