(Bloomberg) – U.S. consumer borrowing rose more than expected in October, reflecting the largest increase in credit card balances since mid-2022.
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Total credit outstanding rose $19.2 billion after a $3.2 billion increase in September, according to data released Friday by the Federal Reserve. The median forecast in a Bloomberg survey of economists was for an increase of $10 billion. This number is not adjusted for inflation.
Revolving debt balances, including credit cards, increased by $15.7 billion. In October, similar promotions were held at Amazon.com Inc.'s Prime Day, as well as Walmart Inc. and Target Inc.
Non-revolving credit, such as loans for car purchases and tuition, increased by $3.5 billion, the Fed report said. That month's auto sales pace was the strongest in more than three years, according to data from Ward's Automotive Group.
The Fed has lowered its benchmark interest rate by 0.75 percentage points since September, but it will take time for that to translate into cheaper financing costs for consumers.
While rising incomes have helped many consumers manage higher borrowing costs, many low-income Americans face greater financial burdens. Federal Reserve Chairman Jerome Powell alluded to this earlier this week, noting that while the U.S.'s overall economic indicators look good, there are pressures on low-income groups.
A New York Fed report released in November found that 3.5% of consumer debt outstanding was at some stage delinquent in the third quarter, up from 3.2% in the previous three months. The percentage of auto loans that became seriously delinquent, meaning payments were at least 90 days late, rose to 2.9%.
—With assistance from Khris Middleton.
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