Led by the biggest rise in credit card debt in five months, along with jumps in both auto loans and student loans, consumers increased borrowing by $18.2 billion in October to a seasonally adjusted $3.08 trillion, the Federal Reserve reported. The number, follows a September jump of $16.3 billion.
Borrowing in the revolving debt category that covers credit cards rose by $4.3 billion following a drop of $218 million in September. It was the biggest monthly gain since May and could be a sign that consumer spending will increase in coming months. Credit card borrowing has lagged other types of debt.
Borrowing for auto loans and student loans was up $13.9 billion. Through October, the measure of auto loans and student loans has increased 6.2% from a year ago and has increased in every month but one since May 2010. Credit card debt is up just 1% from where it was a year ago and is 16.1% below its peak hit in July 2008 - seven months after the recession started.
Analysts hope consumers will increase spending and help drive faster economic growth. The overall economy grew at an annual rate of 3.6% in the July-September period, according to a revised estimate released last week, up from growth of 2.5% in the April-June period.
The weak economy has persuaded more people to return to school to learn new skills. The Federal Reserve Bank of New York quarterly report on consumer credit shows student loan debt has been the biggest driver of borrowing since the recession officially ended in June 2009.
The Fed's borrowing report tracks credit card debt, auto loans and student loans but not mortgages, home equity loans and other loans.