WASHINGTON — The pace of consumer borrowing picked up in September as Americans sought to maintain their standard of living in the face of spillover from the world's economic problems.
Credit outstanding grew at a 7.9% annual rate to a seasonally adjusted $1.28 trillion, the Federal Reserve said Friday. That's up from 4.2% in August and also faster than the 5.2% average for the year so far.
In fact, the figures probably understate the rate of increase because they don't include home equity loans.
"Households are taking the opportunity of low interest rates to refinance their credit card and other installment loans with home equity loans," said economist Lynn Reaser of NationsBank Corp. in Jacksonville, Fla.
The report fits with separate data that showed Americans spent briskly during the month, even though growth in their incomes was subdued. The Commerce Department said this week that the nation's savings rate slipped to negative 0.2% in September, meaning more people financed their spending through borrowing, selling investments or raiding their savings.
Consumer spending was what kept the U.S. economy growing at a healthy 3.3% rate during the July-September quarter even though export sales fell.
Revolving credit, primarily credit cards, grew at a 6.8% rate in September--somewhat faster than the 4.3% average for the year.
Auto lending advanced at a 5.2% rate. It shot ahead at a 10.5% rate in August, the fastest pace of the year, as car sales rebounded from the General Motors strikes.
Other consumer loans, a catchall category that includes loans for education, vacations, mobile homes and boats, rose at a 13.8% rate in September.