Consumer Credit Growth Rebounds in May

Consumer credit jumped $24.6B in May after rising a lower $10.3B in April. May’s print brings the year-overyear growth rate to 4.8 percent, signaling that most consumers remain willing to spend amid rising rates.

Consumer Credit Growth Stronger in May

• Consumer credit expanded a strong $24.6B in May following several months of lackluster growth. May’s gain is closer to the record $30.3B increase seen in November 2017, helping to reverse the slower trend to start the year.
• Both revolving and nonrevolving credit posted solid increases for the month, rising $9.8B and $14.8B, respectively. Revolving credit growth was flat in Q1 and saw an outright decline of $1.1B in March, so today’s print is promising for a Q2 rebound.

Consumer Financing Costs Remain in Check

• May’s rebound in credit financing comes as the FOMC continues to raise rates, pushing up the cost of household debt products. While the past few months had seen a slowdown in consumer credit growth, May’s reading seems to affirm that, for the time being, most consumers are able to take rate increases in stride.
• Slowly rising incomes and solid overall economic growth have likely helped combat higher financing costs, as the debt service ratio remains well below its pre-recession peak.

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