Jul 18, 2013 Walt Wojciechowski
Consumer credit surged in May, shattering the predictions set out by industry experts. The latest report from the Federal Reserve indicated that outstanding credit levels jumped at an annual rate of 8.3 percent in May. The growth was led by revolving credit lines, which expanded by 9.3 percent. Nonrevolving credit jumped by 7.9 percent
MarketWatch reported that it's the highest increase in consumer credit levels recorded in a year, a sign of an active economy. In May 2012, credit grew by 9 percent, the only higher mark recorded in the last 12 months.
Overall, outstanding debts among American consumers went up $19.6 billion during May, a sizable increase on the additional $10.9 billion in debt generated in April.
Economists polled by Bloomberg expected a more modest increase in consumer credit. The source reported that experts predicted growth of just $13 billion. In fact, the highest prediction provided by any Bloomberg economist was $16 billion.
This may be a welcome development for short term lending outlets, as it may indicate a willingness by American consumers to spend and borrower more. If such trends continue, lenders will be looking for ways to take advantage of robust consumer confidence.