U.S. consumer borrowing rises to record $2.75 trillion

Americans swiped their credit cards more often in October and borrowed more to attend school and buy cars. The increases drove U.S. consumer debt to an all-time high. The Federal Reserve reports today that consumers increased their borrowing by $14.2 billion in October from September. Total borrowing rose to a record $2.75 trillion. Borrowing in the category that covers autos and student loans increased by $10.8 billion, while credit card borrowing rose by $3.4 billion—only the second monthly increase in that category over the previous five months. Consumer spending drives roughly 70% of economic activity, and many economists believe it could bounce back in November. But the underlying trend remains weak because unemployment remains high, which means many households lack discretionary income to spend. Many consumers have been reluctant to build up credit card debt, which typically carries steeper interest rates than other loans. Credit card usage has fallen sharply since the 2008 credit crisis. Four years ago, Americans had $1.03 trillion in credit card debt, an all-time high. In October, that figure was 17% lower. During the same period, student loan debt has increased dramatically. The category that includes auto and student loans is 22% higher than in July 2008. That indicates, at least in part, that many Americans who have lost jobs decided to go (back) to school to get training for new careers.