The Federal Reserve announced Thursday that consumer credit in the U.S. increased in April $6.51 billion. This is the smallest increase since last October, but the eighth consecutive monthly gain in consumer borrowing.
The April increase was well below analyst forecasts of roughly $11 billion and follows a revised $12.4 billion gain last Marc, compared with the original estimate of $21.3 billion.
Non-revolving debt, which includes car loans, student loans, and personal loans, combined for a $10 billion increase, while credit card debt dropped by $3.4 billion after a $3.7 billion increase in March. Credit card use picked up at the beginning of the year, when the economy added 252,000 jobs a month between December and February.
But the economy added only 69,000 jobs in May, the fewest in a year, while the April jobs report was revised downward from the original reading of 115,000 jobs to 77,000. Consumers, in turn, are reducing credit card use.
A first quarter Millionaire Corner study of households with a net worth between $100,000 and $1 million finds almost one-third (27 percent) are concerned about their household’s debt. This concern is shared by 40 percent of investors younger than 55. Forty-two percent of these households carry credit card balances, and 33 percent have automobile loans, which is consistent with overall investors we surveyed (31 percent).
An increase in borrowing is considered to be an indicator that consumers are confident in the direction of the economy and willing to take on debt. But another reason for increased borrowing, analysts say, is the struggling job market, which is sending many disappointed job seekers back to school, hence the increase in student loans
Cutting back on credit card use echoes the most recent Conference Board Consumer Confidence Index, which in May suffered its biggest drop since last October.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.