The numbers: Consumer borrowing slowed markedly in September, according to the Federal Reserve on Wednesday. Total consumer credit increased $10.9 billion in September to a seasonally adjusted $3.95 trillion. That’s an annual growth rate of 3.3%. Economists had been expecting a $16.5 billion gain, according to Econoday. Credit rose a revised $22.9 billion in August, up from the prior estimate of $20.1 billion. That’s the largest since last November.
What happened: Revolving credit, like credit cards, slipped at a 0.4% rate in September, the fifth decline out of the past eight months. Nonrevolving credit, typically auto and student loans, rose at a 4.7% rate in September. This is down from an average annual growth rate of 8.03% in 2012, the Fed said. The data does not include mortgage debt.
Big picture: Consumer borrowing has been marching steadily higher. For instance, total borrowing was $2.72 billion in September 2011. But the rate of growth of borrowing has been slowing over the past year. That’s because tight labor markets are attracting more potential students so demand for student loans is falling, said Ian Shephersdon, chief economist at Pantheon Macroeconomics. Julia Coronado, president of MacroPolicy Perspectives, said consumers have been “prudent” about borrowing during this expansion.
Market reaction: Stocks rallied sharply after the midterm elections with the Dow Jones Industrial Average
up more than 400 points.