Consumer Confidence On Rise, More People Pulling Out The Plastic For Purchases
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According to the Federal Reserve figures, more people used their credit cards in May to pay for their purchases. It’s another sign that consumer confidence is on the rise.
The Fed said consumer credit skyrocketed to a seasonally adjusted $19.6 billion compared to just $10.9 billion in April. Wall Street had anticipated a $12 billion gain. When looked at in percentages, the 8.3 percent annualized gain for May was the biggest since May 2012’s nine percent gain.
Moody’s Analytics Senior Director of Consumer Economics Scott Hoyt said the big surprise came with the revolving credit jump. During the recovery, he said, there wasn’t much credit card balance growth.
Hoyt said the biggest consumer debt chunk is with non-revolving credit: auto loans and student loans. Growth in these areas remained flat. The Fed said consumers owe $1.98 trillion in non-revolving credit for the month of May. That’s up from $1.97 trillion a month earlier.
Credit card debt, which is revolving credit, increased to $856.5 billion for May from $849.9 billion during April.
Hoyt said it’s a signal that more people are confident in using their credit cards and run up balances.
Generally this feeling comes when people feel secure about their employment. According to the June jobs report, the economy had a boost of 195,000 new jobs during May. A revised report for previous months showed an extra 70,000 new jobs.
The Conference Board’s Consumer Confidence Index increased from 73.4 in May to 81.4 in June. According to the Conference Board, a June survey revealed 19.6 percent expected jobs to be abundant. In May, that number was just 16.3 percent. However, consumers are still cynical about their raises.
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