US consumers step up borrowing at healthy pace in May
WASHINGTON (AP) — U.S. consumers borrowed more on their credit cards in May and also took out more student and auto loans, a modest sign of economic health.
The Federal Reserve said Monday that consumer borrowing increased 5% that month, just below April’s 5.2% rise. Total outstanding consumer debt, which excludes mortgages, stood at nearly $4.1 trillion in May.
Steady increases in consumer borrowing echo other recent data showing that consumers remain confident in the economy and willing to spend. Retail sales rose for the third straight month in May. Consumer confidence, as measured by the Conference Board, a business research group, is at historically high levels, though it slipped in June.
Consumer credit is monitored by many economists because consumer spending powers about two-thirds of U.S. economic activity.
Still, the economy is expected to have slowed in the April-June quarter from the first three months of the year, economists forecast. Growth was likely about 1.5% to 2% at an annual rate, down from 3.1% in the first quarter.
U.S. trade fights with China and weaker global growth have caused many businesses to pull back on purchases of new plant and equipment. Companies also built up large stockpiles of goods in warehouses and on store shelves in the first quarter, which suggests they are ordering fewer new items.
U.S. businesses are still adding jobs at a healthy clip, which should keep workers willing to spend. Employers added 224,000 jobs in June, a solid increase, while the unemployment rate rose to a still-low 3.7% from 3.6%.