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Associated Press
U.S. consumers increased their borrowing in May, which signifies an increase in overall consumer confidence, according to data released by the Federal Reserve.

Borrowing increases as credit card use rises

– Americans increased their borrowing in May at the fastest pace in a year. Borrowing in the category that includes credit cards reached its highest point since the fall of 2010.

Increased borrowing typically means that consumers are feeling more confident.

Americans stepped up their borrowing by $19.6 billion in May compared with April, the Federal Reserve said Monday in its monthly report on consumer credit. That was the biggest jump since a $19.9 billion rise in May 2012.

Total borrowing reached a record $2.84 trillion.

The category that includes credit card use rose $6.6 billion, also the largest gain in a year. Credit card debt reached $847.1 billion, the most since it was $861.9 billion in September 2010. Credit card debt remains about 16 percent below its high of $1.02 trillion in July 2008 – just before the financial crisis erupted.

Borrowing for autos and student loans rose $13 billion in May. That was the sharpest increase since February.

This category of borrowing has been rising especially fast, driven by loans to pay for college.

The Federal Reserve’s consumer credit report does not separate student loans from auto loans. But data from the Federal Reserve Bank of New York show that student loan debt has been the biggest driver of borrowing since the Great Recession officially ended. In part, that’s because some unemployed Americans have returned to school for training in hopes of landing a job.

More credit card borrowing could help boost consumer spending, which accounts for 70 percent of economic activity. But consumers have been hesitant to run up high-interest debt since the recession ended. Some economists say many Americans remain cautious because higher Social Security taxes this year have reduced paychecks for most.

The measure of card debt in the Fed’s report has risen $15.8 billion this year.

That rise compares with annual increases of $25 billion to $50 billion in credit card debt before the recent recession, which officially began in December 2007 and ended in June 2009.

Rising home prices and steady job growth have helped offset any damage to the U.S. economy from the higher Social Security tax.

Employers added 195,000 jobs in June and many more in April and May than previously thought, the government said Friday. Pay was also up sharply. Over the past 12 months, pay has risen 2.2 percent, while consumer prices have increased 1.4 percent over the same period.

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