Consumer credit climbed more than forecast in May, led by the biggest jump in credit-card debt in almost five years that may signal Americans are struggling to make ends meet.
The $17.1-billion U.S. increase, exceeding the highest estimate of economists surveyed by Bloomberg News and the largest this year, followed a $9.95-billion U.S. gain the previous month that was more than previously estimated, the Federal Reserve said today in Washington. Revolving credit, which includes credit card spending, rose by $8 billion U.S, the most since November 2007.
A pickup in borrowing coincides with a slowdown in hiring and declines in consumer confidence that indicate the job market is failing to spur enough gains in wages to cover expenses. Employers added fewer workers to payrolls than forecast in June while the jobless rate stayed at 8.2%.
The median forecast of 32 economists called for an $8.5-billion U.S. increase in consumer credit. Estimates ranged from gains of $4 billion to $15.6 billion U.S.
Non-revolving debt, including educational loans and loans for motor vehicles and mobile homes, increased by $9.1 billion U.S. in May, Monday’s report showed.
Lending by the federal government, which is mainly for educational loans, climbed by $6.2 billion U.S. before adjusting for seasonal variations, as students tried to beat a looming surge in borrowing costs.
President Barack Obama last week signed into law a bill providing a one-year extension on student-loan interest rates, in order to avoid a doubling to 6.8 percent that would have taken effect July 1. The rate affects about 7.4 million students, according to the White House.
The consumer credit report doesn’t track debt secured by real estate, such as home equity lines of credit and home mortgages.
Gains in credit may also indicate that banks are more willing to lend, representing a thawing that may bolster spending.
