U.S. consumers stepped up their borrowing in July, led by rising auto loans and higher credit-card balances.
The Federal Reserve said Monday that overall consumer borrowing jumped $26 billion in July, to $3.24 trillion. The 9.7 percent increase matches April’s gain as the largest in three years.
The figures add to a mixed picture for consumers in recent weeks. A healthy increase in credit usually indicates that consumers are shedding some caution about spending, which would boost economic growth. Rising debt loads are generally a sign of greater confidence in the economy.
But other data hasn’t been as positive. Overall spending fell in July for the first time since January, the government said last month. And consumer confidence, as measured by the University of Michigan, has barely budged in the past year.
Auto and student loans jumped 10.6 percent to $2.36 trillion, fueled by strong auto sales. Automakers in July reported their best sales figures for that month in eight years. Credit-card debt, meanwhile, rose 7.4 percent to $880.5 billion.
Americans have reined in their credit-card spending since the Great Recession, and household finances have generally improved. But student and auto loans have skyrocketed, intensifying concerns that they are creating new challenges for consumers. Young Americans saddled with student debt may not be able to buy homes or spend on other items the way previous generations did.
And more Americans with checkered credit histories are obtaining auto loans, which raises the risk that millions of them could default. New auto loans reached their highest level in eight years this spring, the New York Federal Reserve said.
Student loans have soared since the recession ended, topping $1.1 trillion by the second quarter of this year. That’s up from $700 billion in 2009.
Still, consumers are reluctant to build up their credit-card balances. Many have likely switched to debit cards instead. Total outstanding credit-card debt was more than $1 trillion when the recession hit in December 2007. The total bottomed out at about $835 billion in April 2011 and has only recovered gradually since then.