- Americans borrowed money at a solid pace in May, a sign that consumers have remained optimistic about the economy despite expectations for growth to cool.
- The Federal Reserve said Monday that consumer credit, which measures outstanding nonmortgage debt, climbed about 5% to $4.1 trillion in May.
- A solid pace of credit growth can point to a positive outlook for consumer spending, which accounts for more than two-thirds of economic activity.
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Americans borrowed money at a solid pace in May, a sign that consumers have remained optimistic about the economy despite expectations for growth to cool.
The Federal Reserve said Monday that consumer credit, which measures outstanding nonmortgage debt, climbed about 5% to nearly $4.1 trillion in May. The pace was slightly slower than a 5.2% increase in the previous month.
The healthy uptick in credit levels can reflect upbeat outlooks for the economy and for consumer spending, which accounts for more than two-thirds of business activity. Retail sales rose for a third straight month in May, even as economists dimmed their outlooks for growth in the US and elsewhere.
Still, an increasing number of credit-card balances have been barreling toward serious delinquency territory in recent years, according to the Federal Reserve. A record number of Americans also have auto loans that are at least 90 days past due.
"The substantial and growing number of distressed borrowers suggests that not all Americans have benefited from the strong labor market and warrants continued monitoring and analysis of this sector," economists Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw wrote in a report out in March.
The cost of servicing debt remains historically low, however, with the debt service ratio for consumer credit at 5.66 in the first quarter.
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