WASHINGTON – Consumers increased their borrowing in May with use of credit cards and the category that covers student and auto loans both showing gains.
The Federal Reserve reported Friday that total borrowing increased by $18.6 billion in May, up from a gain of $13.4 billion in April. It was the largest since a surge of $29.4 billion in March, which had been the biggest monthly increase on record.
Borrowing in the auto and student loan category climbed $16.2 billion. Borrowing in the category that covers credit cards rose $2.4 billion.
The May gain pushed total consumer credit to a record of $3.62 trillion.
Consumer spending, which accounts for 70 percent of economic activity, is expected to accelerate in the current April-June period, helping boost the overall economy. Economic growth, as measured by the gross domestic product, slowed to a barely perceptible annual growth rate of 1.1 percent in the January-March quarter, in part because consumer spending slowed.
Many economists are forecasting that second quarter growth will accelerate to a rate around 2.5 percent.
One reason for optimism is a belief that employment growth, which slowed this spring, will accelerate in the coming months. The said in a separate report Friday that employers added 287,000 jobs in June, a big improvement from the tiny gain of 11,000 jobs in May.
The Fed's monthly report on consumer borrowing does not cover home mortgages or any other loans secured by real estate such as home equity loans.