U.S. Consumer Credit Expands But Credit Cards Use Sags

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(Reuters) - U.S. consumer credit expanded at a solid pace in September in a hopeful sign for household spending, although Americans appeared to use their credit cards more sparingly, Federal Reserve data showed on Wednesday.
Consumer credit grew $11.36 billion in September.

Credit has been expanding almost continuously since mid-2010 as the country recovered from the 2007-09 recession, and the recent expansion could boost economic growth by helping consumers spend more on cars and education.

Consumer spending has perked up in recent months, helping offset weakness in investment as businesses worry about a possible recession next year if fiscal policy sharply tightens.

So far this year, overall consumer credit has expanded in eight of nine months. Consumer credit growth in September was just above the median forecast in a Reuters poll of analysts, although it was lower than the $18.39 billion in growth registered the prior month, according to revised figures.

Nonrevolving credit, which includes student and auto loans, rose $14.27 billion in September. Student loans made by the government rose 27.9 percent in the 12 months through September, slightly less than the 12-month growth posted through August.

The cooler growth in overall consumer credit reflected a contraction in revolving credit, which mostly measures credit-card use. That category dropped $2.90 billion in September. Growth in revolving credit has been choppier than overall consumer lending. The decline in September marked the third drop in four months for revolving credit.

Credit data can be tricky to interpret because cutting back on debt is not always a sign of pessimism. People might be relying less on credit card debt to buy things because they are earning more money. While the U.S. labor market remains hobbled by a 7.9 percent un employment rate and stagnant wages, the share of working-age Americans who have a job rose to a three-year high in October at 58.8 percent.

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