U.S. consumer credit grows at record rate in June

FILE PHOTO: Shoppers carry bags of purchased merchandise at the King of Prussia Mall, United States’ largest retail shopping space, in King of Prussia, Pennsylvania, U.S., December 8, 2018. REUTERS/Mark Makela

WASHINGTON (Reuters) – U.S. consumer credit grew at the fastest rate ever in June, as Americans increased their credit card usage to drive consumer spending in the second quarter, data from the Federal Reserve showed on Friday.

Total consumer credit expanded at a pace of $37.69 billion, which was the quickest rate ever and followed a $36.69 billion increase in May, the U.S. central bank said. Economists polled by Reuters had expected consumer credit to increase at a rate of $23.00 billion in June.

An alternate measure tracking the monthly change in the total amount of credit outstanding increased by the most since December 2010, the data showed. That measure showed that revolving credit, which mostly measures credit-card use, rose by $17.858 billion, the largest gain since 2006, after climbing by $9.089 billion in May.

The surge in June could explain the sustained robustness in consumer spending during last quarter, even as the flow of stimulus money from the government ebbed.

“We expect consumer credit growth will continue at a healthy clip in the second half of 2021, supported by strong consumer spending and an easing of lending standards for consumer loans,” said Nancy Vanden Houten, lead economist at Oxford Economics in New York.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, notched a second straight quarter of double-digit growth. That helped to pull the level of gross domestic product above its peak in the fourth quarter of 2019.

But growth in nonrevolving credit, which includes auto loans as well as student loans made by the government, slowed to a pace of $19.831 billion from a rate of $27.601 billion in May.

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