Household Debt Rises at its Fastest Clip Since 2008, Expectations to Boost Economy

“WASHINGTON, Sept 20 (Reuters) – U.S. households increased their borrowing by the most since early 2008 in the second quarter, a development that could boost consumer spending and a lackluster economic recovery.

Household debt climbed $39.4 billion, the first gain in more than a year, to $13 trillion in the second quarter, the Federal Reserve said on Th ursday — just $2 trillion shy of the country’s total yearly economic output.

Economists said the rise in borrowing was an indication that the U.S. central bank’s accommodative monetary policy and easing financial market conditions were finally filtering through to the real economy.

“It’s encouraging news. With credit growth, one would expect to see an increase in spending and investment,” said Millan Mulraine, a senior economist at TD Securities in New York.

“While it may not necessarily be evident now, that is a sign that the recovery is likely to gain strength if this trend continues. The problem is, we are not getting strong job growth.” “