WASHINGTON – American consumers stepped up their borrowing in August, taking on greater debt in a possible sign of optimism amid stable job growth.
Total consumer borrowing rose $25.9 billion in August to nearly $3.7 trillion outstanding, the Federal Reserve said Friday Consumer debt is rising at an annual pace of 8.5 percent, the strongest clip since September of last year.
Revolving credit, which covers credit cards, increased $5.6 billion, an annual gain of 7 percent. The category that includes auto and student loans jumped $20.2 billion, an increase of more than 9 percent from a year ago.
Consumers account for about 70 percent of U.S. economic activity. Their spending is among the few strengths that are helping to fuel the broader economy, which expanded at just 1.1 percent in the first half of 2016.
Anchoring the improved consumer borrowing has been a rising confidence in the job market.
Employers added 156,000 jobs in September, a solid increase reported by the government on Friday. The improving outlook for hiring has lured more job seekers to search for work, causing an influx of people into the job market last month that pushed the unemployment rate up ever so slightly to 5 percent.
More Americans are confident that they can find steady paychecks. Over the past 12 months, the share of adults either working or looking for work has risen from a 40-year low of 62.4 percent to 62.9 percent.
Despite the job gains, accelerating economic growth appears to be elusive.
A separate report indicates that consumer spending was unchanged in August despite the greater borrowing activity. And factory production has been weak as manufacturers cope with a global economic slowdown.