U.S. consumer borrowing picked up in July bolstering expectations that consumer spending will remain a key factor in economic growth this year.
Outstanding consumer credit rose by a seasonally adjusted $17.7 billion in July, the Federal Reserve said Thursday. Adding to the sense of strength, a slowdown in June was revised away.
The Fed’s data now show a $14.5 billion gain in June, up from the prior estimate of $12.3 billion, which was the slowest pace in almost four years.
Economists had expected a $16.0 billion rise in July.
In the second quarter, real consumer spending rose at a 4.4% annual rate. Economists expect spending to moderate somewhat in the third quarter but remain strong.
Consumer credit rose at a 5.8% seasonally adjusted annual growth rate in July, a pickup from June’s upwardly revised 4.8% pace. It is below the 7.8% rate seen in March, which was the fastest monthly pace this year.
In keeping with recent trends, nonrevolving credit outstanding, including student and auto loans, drove borrowing in July. This category of debt rose at a 6.7% annual pace in July compared with June’s 2.4% growth rate.
Revolving credit outstanding, mostly credit cards, rose at a 3.5% annual pace in July, down from June’s sharp 11.5% gain.