WASHINGTON – Consumer credit increased in May by the most in a year, a sign low borrowing costs were boosting economic growth although interest rates have since risen.
Total consumer installment credit advanced by $19.6 billion to $2.8 trillion, Federal Reserve data showed on Monday. Economists polled by Reuters had expected consumer credit to rise $12.5 billion during the month.
Consumer debts grew both for non-revolving credit, which includes loans for cars and college tuition, as well as for revolving facilities like credit cards. Overall consumer debt rose the most since May 2012.
The report does not cover borrowing for homes, which has grown considerably more expensive in recent weeks as Wall Street bets the Fed will ease its monetary support for the economy by the end of the year. Analysts worry a rapid rise in interest rates could deal a blow to the economy's slow recovery from the 2007-09 recession.
Yet despite an increase in interest rates on many kinds of loans in May, nonrevolving credit increased $13.0 billion during the month. Some analysts had expected a strong reading in that category because other reports showed strong vehicle sales during the month.
Revolving credit jumped by $6.6 billion in May. Borrowing costs, however, have since continued to rise.
(Reporting by Jason Lange; Editing by Andrea Ricci)