Americans are taking advantage of greater credit availability without a heavy reliance on plastic, a trend economists say bodes well for a healthy recovery in consumer credit.
The Federal Reserve reported Wednesday that consumer borrowing, excluding mortgages, surged ahead by $13.8 billion to $2.8 trillion in June, a 5.9 percent annual rate increase. Non-revolving credit, the category that includes student loans and auto financing, shot up $16.5 billion for the month, offsetting a $2.7 billion decline in credit card spending.
The Fed does not provide precise numbers for auto or education financing, but it said student loans issued by the federal government climbed $3.3 billion in June. That means car loans likely were responsible for most of the mid-year gains.
It is a notable shift in consumer behavior. [...]
Wage stagnation and higher payroll taxes may be making Americans skittish about running up their credit cards. Researchers at the Commerce Department say incomes inched up 0.3 percent in June, after rising a mere 0.4 percent in May.
“If we want to see a strong comeback in consumer credit and consumer spending, we better hope those fast-food workers striking across the country get what they want,” said Amy Traub, a senior policy analyst at Demos, a public-policy organization. “Ultimately, it will take a rise in wages to fuel consumer spending and borrowing and an economic recovery as a whole.”