Consumer credit is still on the rise. Is it due to the public borrowing for summer vacations, or is it something else? The latest report from the Federal Reserve shows that credit rose during the month of May. It is not just rise, it rose by 8% annualized and that was the highest gain in 2012. The gain was by $17.12 billion to over $2.57 trillion. Dow Jones was calling for only $7.8 billion and Bloomberg had a consensus of a build of $8.5 billion.
Today’s report almost feels like Christmas in May because the 8.04% rise was the highest since December’s rise of 8.27%. You would expect to see credit get used in December because of the Christmas holidays. Is the buildup in May tied to the pre-vacation season? Or are the retail sales holding up better than some of the numbers might be suggesting?
There is also more good news if you like to see credit expansion. The figure from April’s gain was revised up to $9.95 billion from $6.51 billion originally telegraphed.
Non-revolving credit rose by $9.1 billion to $1.703 trillion and those loans include items such as car loans and student loans. Now you know why we projected that the student loan market will hit $1 trillion by the end of 2012 as the report showed that this student segment was up $6.2 billion to $464.9 billion.
The debt on credit cards and other revolving credit rose by just over $8 billion to $870.19 billion in May.
JON C. OGG
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Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
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