Banking

U.S. consumer credit surges again as loans, card spending jump

U.S. consumer borrowing surged again in April, following a record jump a month earlier, fueled by rising prices and the continued strength of American consumers. 

Total credit increased $38.1 billion from the prior month after a downwardly revised $47.3 billion gain in March, Federal Reserve figures showed Tuesday. The median forecast in a Bloomberg survey of economists called for a $35 billion advance. The figures aren’t adjusted for inflation.

Patrick T. Fallon/Photographer: Patrick T. Fallon/

On an annualized basis, borrowing climbed 10.1%.

Revolving credit outstanding, which includes credit cards, increased $17.8 billion after surging $25.6 billion in the month before. Nonrevolving credit, which includes auto and school loans, rose $20.3 billion after sizable gains in the prior two months.

Americans have so far continued spending in the face of surging prices, including in April, when personal outlays rose 0.9% from the prior month. Adjusted for inflation, spending also increased.

With inflation largely outpacing wage growth, consumers have leaned on both savings and credit cards to pay for everyday essentials and discretionary purchases. The savings rate is at its lowest level since 2008, and a record 537 million credit card accounts were opened in the first quarter, according to the New York Fed.

While that’s positive in the sense that consumer spending is by far the largest contributor to the U.S. economy, it could be concerning if Americans fail to keep up on payments. That could ultimately mean a slowdown in the pace of inflation-adjusted consumption.

Judging by Bank of America Institute data, that may already be happening. Card spending per household moderated to 4.3% from a year earlier in May, the group said in a report Monday. That’s down from 6.8% in April and below the expected 8.2% increase in Friday’s consumer price index.

— With assistance from Olivia Rockeman and Kristy Scheuble.

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