The amount of outstanding consumer credit has grown, and the latest figures prove that Americans have no issues with pulling out the plastic.
In May, consumer credit increased at a seasonally adjusted annual rate of 5%. Revolving credit increased at an annual rate of 8.25%, while non-revolving credit increased at an annual rate of 4%, according to the latest consumer credit information from the Federal Reserve.
Total credit rose $17.1 billion from April 2019, which is in line with the median estimate of economists, following a $17.5 billion gain in April. While credit card and other revolving debt outstanding increased at a faster rate, non-revolving credit posted the smallest increase in almost a year.
Employers added 224,000 jobs in June, more than any economist forecast, after a sluggish May. While pay gains have been cooling, the job additions point to more workers being pulled in from the sidelines, boding well for future months, Bloomberg reports. This movement in the job market and the potential for wage growth extends a historic period of economic growth in the states, and it continues to support extensive consumer borrowing.
More than half of Americans are losing sleep over their finances, so even though an increase in consumer credit suggests that consumers harbor a positive outlook on the economy, consumers themselves may be unsure of their ability to manage their own spending.
Revolving credit outstanding, which includes credit card debt, increased $7.2 billion in May after a $7 billion advance in April. Many consumers, however, aren’t planning on paying off that credit card debt, which can then have a huge impact on their credit scores and debt levels, making securing more credit increasingly difficult. The latest interest rates for credit card plans with accounts assessed interest is 15.13%.
Non-revolving debt outstanding climbed $9.9 billion in May, the least since June 2018, after rising $10.5 billion in April. Non-revolving debt includes car loans and loans for education.