WASHINGTON (AP) – Consumer borrowing in the United States rose $ 18.6 billion in April, fueled by a surge in auto and student loans that offset a decline in credit card use.
The April gain reported by the Federal Reserve on Monday was the third consecutive month of strong consumer borrowing. It follows a similar increase of $ 18.6 billion in March.
The latest increase reflects a $ 20.6 billion increase in the Fed’s category that covers auto and student loans. This is the largest increase in these loans since an increase of $ 22.7 billion in June 2020.
The category that covers credit cards saw a decline of $ 2 billion. Credit card borrowing is down 12.2% since peaking in February 2020 just before the pandemic hit hard, shutting down businesses and losing 22 million jobs.
Since then, credit card use has only increased in three months, as consumers cut back on spending in favor of building up savings.
Nancy Vanden Houten, senior economist at Oxford Economics, noted that despite a rebound in consumer spending fueled by stimulus checks and a reopening of the economy after pandemic lockdowns, consumers are still reluctant to use their credit cards.
“We expect consumer credit growth to accelerate in the second half of 2021, with consumers dusting off their credit cards and reopening and better health conditions prompting higher spending,” she said.
Consumer borrowing is being watched closely for signals it can send about households’ willingness to finance consumer spending, which accounts for over two-thirds of economic activity.
Total borrowing in the Fed’s monthly report stood at $ 4.24 trillion in April, 0.4% above the pre-pandemic peak of $ 4.22 trillion set in February 2020.
The Fed’s monthly borrowing report does not cover real estate mortgages or any other loans secured by real estate, such as home equity loans.
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