Consumer Credit in August Hits Brisk 10.1% Pace

WASHINGTON — Americans took out consumer credit at an annual rate of 10.1% in August, up substantially from the July borrowing pace, the government reported Friday.

The Federal Reserve said consumers took out $5.44 billion more in credit than they paid off in August as auto loans and credit card debt grew more rapidly.

Consumer debt had risen $3.62 billion in July, a 6.7% annual rate, as the pace of borrowing slowed momentarily following several months of rapid gains.

In August, auto loans grew by $2.29 billion, a 9.7% rate of increase, following a 4.7% pace in July.

Michael Penzer, an economist with Bank of America in San Francisco, said the August increase was somewhat higher than many economists had been looking for and in part represented a reaction to the sluggish July increase.

Penzer noted that consumer debt has risen by 9% in the past year as personal incomes have gone up by a 7.5% annual rate, indicating that Americans were still willing to take on debt at a faster pace than their incomes were rising.

“Even though a lot of private economists are looking for consumers to moderate their spending, this report doesn’t suggest they are doing that,” he said. “Anybody looking for a slowdown in the economy in the second half of the year won’t find it in these numbers.”

The Federal Reserve began a series of credit-tightening steps in late March in an effort to dampen demand and cool off inflationary pressures. Many analysts believe that the central bank will resume pushing interest rates higher after the Nov. 8 election.