But there are forces still working to dampen growth, including thousands of federal furloughs which depressed income growth in July. And job growth has been weaker than first thought.
The government reported that employers added 169,000 jobs in August but 74,000 fewer jobs in June and July than previously reported.
The unemployment rate dropped to 7.3 percent, but lowest in nearly five years. But the rate fell because more Americans stopped looking for work and were no longer counted as unemployed.
The overall economy grew at an annual rate of 2.5 percent in the April-June quarter. But recent data has economists predicting that growth may be slowing in the July-September quarter to an annual rate of 2 percent.
The Fed's borrowing report tracks credit card debt, auto loans and student loans but not mortgages, home equity loans or other loans secured by real estate.