U.S. consumer borrowing rose by $18.6 billion in April, fueled by a big rise in auto and student loans that offset a drop in credit card use.

 

The April gain reported June 7 by the Federal Reserve was the third straight month of strong increases in consumer borrowing. It followed a similar $18.6 billion increase in March.

The latest increase reflected a $20.6 billion increase in the Fed’s category that covers auto and student loans. It was the biggest increase in those loans since a $22.7 billion rise in June 2020.

Consumer borrowing is followed closely for signals it can send about households’ willingness to finance consumer spending, which accounts for more than two-thirds of economic activity.

Total borrowing in the Fed’s monthly report stood $4.24 trillion in April, 0.4% above the pre-pandemic peak of $4.22 trillion set in February 2020.

"From our perspective, it’s been a very strong year on the consumer lending front," said Jay Magulski, chief executive of Landmark.

The Fed’s monthly borrowing report does not cover home mortgages or any other loans secured by real estate such as home equity loans.

Nancy Vanden Houten, senior economist at Oxford Economics, noted that despite a rebound in consumer spending fueled by stimulus checks and an economy reopening after pandemic lockdowns, consumers are still reluctant to use their credit cards.

Consumer borrowing is followed closely for signals it can send about households’ willingness to finance consumer spending, which accounts for more than two-thirds of economic activity.

High student loan debt can leave graduates less qualified for loans for cars and homes.