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The numbers: Total consumer credit rose $23 billion in April, up from a revised $22.8 billion gain in the prior month, the Federal Reserve said Wednesday. That translates into a 5.71% annual rate, up from a revised 5.69% gain in the prior month. It is the fastest pace of credit growth since November.
Economists had been expecting a $21.6 billion gain, according to the Wall Street Journal forecast.
Key details: Revolving credit, such as credit cards, rose 13.2% in April, slightly less than the 14.6% gain in the prior month.
Nonrevolving credit, typically car and student loans, rose 3.2%, up from a 2.7% growth rate in the prior month. This category of credit is much less volatile.
The Fed’s data does not include mortgage lending, which is the largest category of household debt.
Big picture: Economists are watching the consumer closely because spending is central to the outlook for the economy.
Consumer spending was strong in April, easing concern about an imminent recession.
Some economists think the credit crunch in the wake of the collapse of Silicon Valley Bank and several other regional banks will push the economy into recession, but others see a resilient consumer willing to spend.
In an interview with MarketWatch, Philadelphia Fed President Patrick Harker said he was not seeing a significant pullback in credit in his district.
Some analysts said that households and consumers with lower credit scores are paying more for credit. This might broaden to more consumers in coming months.
What are they saying? “We are watching these data for signs of strains on household balance sheets. But, for now, a strong labor market is still supporting incomes and consumption and growth ultimately,” said Rubella Farooqi, chief U.S. economist at High Frequency Economics, in an email.
Market reaction: Stocks
DJIA,
SPX,
were mixed in late day trading on Wednesday. The yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to 3.79%.
