The credit balances of consumers — not including mortgages or equity lines — surged higher in April than economists expected, according to an update released by the Federal Reserve on Friday.
Consumer debt as measured by the Fed includes mostly balances from credit cards, auto loans and student loans. The report for April showed a jump of $20.5 billion, after increasing by an upwardly revised $21.3 billion in March.
The jump in consumer credit bodes well for the economic recovery, which hinges greatly on the spending habits of Americans.
The latest increase included a sharp rise in revolving credit, mostly from credit-card debt, to an 11.57 percent annual rate. That’s the second-biggest jump since the recession ended nearly six years ago. Revolving credit increased by $8.6 billion in April after rising by $4.9 billion in March.
Additionally, non-revolving credit, such as student loans and auto loans, rose $12 billion in April following a $16.4 billion increase in the previous month. Sales of new and used vehicles have been moving at a record pace over the last several months. So much so that the average new vehicle loan hit a new high of $28,711 in the first quarter, according to Experian Automotive.
Overall consumer credit, meaning Americans’ total debt outside of mortgages, climbed by a seasonally adjusted $20.54 billion in April, or at a 7.33 percent annual rate. Most economists had projected a rise of $16 billion.
The positive consumer credit figures bolster claims by economists that the U.S. gross domestic product, GDP, will bounce back in the second quarter. GDP, which measures the economy’s total output of goods and services, contracted at an annual rate of 0.7 percent in the first quarter. But economists expect growth of 2 percent to 2.5 percent in the second quarter, fueled by stronger consumer spending.