As per the US Federal Reserve, consumers in the United States raised borrowings at their quickest during the preceding six months. In May, the total consumer borrowing went up by $18.4 billion. This is the biggest gain since a rise of about $251.1 billion during November 2016. Other than that, there was an $8.2 billion gain in April. The latter was statistically the weakest rise in almost six years. It was subsequently revised to a better rise of about $12.9 billion. The numbers mirror a sharp rebound in the credit card category.
The Federal Reserve expects the US economy to strengthen further. If this happens, there would be a more gradual rise in the key interest rate. This rate forecast got included in Federal Reserve's monetary report to the US Congress.
Credit rose $18.4 billion and it pushed the borrowing measured in the monthly report to $3.84 trillion. This is a fresh record. The monthly credit report of the Federal Reserve does not encompass any kind of debt which is secured by any kind of real estate like home equity loans. Home mortgages are not covered.
Credit card use
The financial strength enjoyed by markets in June mirrored an extensive credit card usage. Spends made via credit cards shot up to $7.4 billion. This is much better than the increase of $1.2 billion in April. The latter category includes student loans and automobile loans as well. It went up by $11.05 billion. This is a little lower than the $11.8 billion addition in April. Sales of automobiles have decreased in 2017 after the scorching rise in 2016.
Consumer borrowing is watched closely by economists as it is a vital indicator of consumer spending patterns. A number of economists hold the view that households will be increasingly confident when it comes to increasing their exposure to debt. The reason for such new-found confidence is that the labor market is on solid ground. The number of jobs has increased. Stock markets are at their peak levels. Consumer spending makes up an overwhelming 70 percent of the total economic activity.
The Federal Reserve Bank of New York authored a separate report stating that the total American household debt reached peak highs in 2017 first quarter. These loans are inclusive of mortgages. The highs surpassed the previous highs achieved in 2008. That was the time the financial crisis plunged the nation into deep recession.