The Federal Reserve Board found that U.S. consumer credit was up 8 percent at the annual rate in May, its fastest pace of the year. Total debt is now $2.58 trillion. Revolving credit lines grew faster than nonrevolving debt this month, up 11.7 percent versus 6.6 percent, respectively.
Revolving credit accounts total $870.2, with nonrevolving loans equaling $1.7 trillion. Revolving accounts balances – including credit cards and other lines of credit – had fallen by 4.9 percent in April, so May’s figure represents a turnaround from the previous month’s decline. This suggests an increased willingness on the part of consumers to take on debt for their purchases.
The nonrevolving loan level is an all-time high. Much of the recent growth has stemmed from auto and student loans. To illustrate this growth, federal government balances from student loans are over $100 billion greater than one year ago.
These numbers reinforce the notion that consumers continue to spend, even if that means that they are going further in debt to do so. This is true, of course, even as overall personal spending in May was essentially flat.
Chad Moutray is chief economist, National Association of Manufacturers.