Auto and Student Loans Boost US Consumer Loans in April



WASHINGTON (AP) – US consumer loans rose $ 18.6 billion in April, boosted by strong growth in car and student loans, which offset a decline in credit card use.

The April gain, reported on Monday by the Federal Reserve, was the third consecutive month of a significant increase in consumer borrowing. In March, it followed a similar increase of $ 18.6 billion.

The latest increase reflected a $ 20.6 billion increase in the Fed’s category, which covers auto loans and student loans. This was the largest increase in these loans since $ 22.7 billion in June 2020.

The category that covers credit cards has dropped by $ 2 billion. Credit card borrowing has declined 12.2% since peaking in February 2020, right before the pandemic erupted violently, shutting down businesses and resulting in the loss of 22 million jobs.

Since then, use of credit cards has increased in just three months as consumers cut their spending in favor of accumulating savings.

Nancy Vanden Houten, senior economist at Oxford Economics, noted that despite a rebound in consumer spending, fueled by stimulus checks and a rebound from the pandemic lockdown, consumers remain reluctant to use their credit cards.

“We expect consumer credit growth to pick up in the second half of 2021 as consumers shake off their credit cards and reopening and health improvements drive higher spending,” she said.

Consumer loans are monitored closely as they can send signals that households are willing to finance consumer spending, which accounts for more than two-thirds of economic activity.

Total borrowing in the Fed’s monthly report was $ 4.24 trillion in April, up 0.4% from the pre-pandemic peak of $ 4.22 trillion set in February 2020.

The Fed’s Monthly Loan Report does not cover mortgages or any other loans secured by real estate, such as home equity loans.


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