(WASHINGTON) — A Federal Reserve report out Monday showed that Americans spent more on credit cards in May, the highest monthly gain in four years. Consumer credit climbed to $2.6 trillion, a more than $17 billion increase, according to the report.
During the month of May, the report says non-revolving credit, including student loans and auto financing, grew by a seasonally adjusted $9 billion to $1.7 trillion. Revolving credit ballooned by $ 8 billion to $870 billion.
With the economy still floundering, the increase in reliance on plastic is likely also the result of the slowdown — there are not enough wages to cover expenses.
Stuart Hoffman, chief economist at PNC Financial Services Group, says the report may be the result of student loan debt and not much of an indicator of consumer spending in general. According to the report, student lending appeared to be a major driver for overall credit growth — up $6.2 billion in May to $464.9 billion.
“This report today shows a little more borrowing, but you now put that in a bigger context with consumers you’re still not seeing a lot of job growth and still being cautious. I don’t think this represents any kind of a big upside for consumer spending,” he says.
Hoffman adds the increases don’t seem that large when one considers that, “a lot of students are still borrowing to be able to go to college.”
Copyright 2012 ABC News Radio
Ivaylo Vezenkov and Lauren del Valle, CNN
Erin McClam, CNN
Jackie Wattles, CNN