Washington – Borrowing by U.S. consumers rose by the most in 10 months in April as Americans took out more car loans and charged more on credit cards.
Consumer credit, or nonmortgage loans to individuals, rose $10.6 billion, or at an annual rate of 5.9 percent, to $2.17 trillion, the Federal Reserve said Wednesday. In March, consumer debt increased by $1.4 billion.
People who relied on equity from their homes rather than bank debt during the five-year housing boom may be returning to more conventional credit as the real estate market cools. Higher interest rates will slow the pace of borrowing and consumer spending in coming months, economists said.
“It may be that we are beginning to see the consequences of declines in mortgage refinancing,” said Richard DeKaser, chief economist at National City Corp. in Cleveland.
Economists forecast a $3.5 billion rise in April consumer credit after a previously reported $2.5 billion increase a month earlier, according to the median estimate of 36 economists in a Bloomberg News survey.
Some shoppers may have used credit cards to pay for gas and other items after April taxes left them with less cash, said Mike Englund, chief economist at Action Economics LLC in Boulder.
“We’ve seen enormous tax payments over the past few months, and so the hit to consumer balance sheets could have left some people cash- strapped for a little while,” Englund said.
Non-revolving debt, such as car loans, rose $7.6 billion in April after rising $2.9 billion a month earlier, according to the Fed. Revolving debt, such as credit cards, rose $3 billion after falling $1.5 billion a month earlier.
Sales of cars and light trucks rose to an annual rate of 16.7 million in April, up from 16.6 million in March.
