Consumers expanded their borrowing in July at the fastest pace in nearly 2 years

Sealed boxes move along a conveyor at a Amazon Inc. fulfilment center during the online retailer's Prime Day sales promotion day. Economists said this was behind the surprise jump in credit card usage in July.

The numbers: Consumer borrowing picked up in July at the fastest rate in almost two years, according to Total consumer credit increased $23.3 billion. That’s an annual growth rate of 6.8%, up from a 4.1% rate in the prior month. That’s the fastest pace since November 2017. Economists had been expecting a $16 billion gain, according to Econoday.

What happened: Revolving credit, such as credit cards, surged 11.2% in July, after falling 0.2% in June. That’s also the highest rate in 20 months. Nonrevolving credit, typically auto and student loans, rose 5.3% in July. The data does not include mortgage loans.

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Big picture: Economists are directing all of their attention to the health of the consumer, with business spending faltering in the face of global weakness and trade tensions. The strong labor market and rising wages have kept spending at a solid pace this year. But talk of recession could turn into a self-fulfilling prophesy if consumers pull back.

What are they saying? “July included Amazon’s Prime Day…we suspect this drove the surprise jump in revolving debt,” said T.J. Connelly, head of research at Contingent Macro Research.

Market reaction: The Dow Jones Industrial Average   rose slightly Monday as investors are awaiting central bank decisions in the next 10 days. Both the European Central Bank and the Fed are expected to reveal easier-money initiatives.

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