After posting a 10.4% increase in May, consumer debt continued to expand, growing by a record rate in June.
Consumer credit grew by $37.69 billion in June, according to the latest data from the Federal Reserve. That represents a 10.6% increase. The Fed also revised the May number up from $35.3 billion to $36.6 billion.
The big expansion in consumer credit was far above the 20.8 billion expected.
Americans collectively owe $4.32 trillion in consumer debt.
The Federal Reserve consumer debt figures include credit card debt, student loans and auto loans, but do not factor in mortgage debt. When you include mortgages, Americans are buried under nearly $15 trillion in debt.
Revolving credit, primarily made up of credit card debt rose by $17.9 billion in June, a whopping 22% increase. Americans now owe $992.2 billion in credit card debt.
Consumer spending made up over 70% of GDP in the second quarter. It appears as stimulus checks ran out, Americans turned to plastic to continue their spending spree. As Reuters reported it, “The surge in June could explain the sustained robustness in consumer spending during last quarter, even as the flow of stimulus money from the government ebbed.”
Through the pandemic, Americans, by and large, kept their credit cards in their wallets and paid down balances. This is typical consumer behavior during an economic downturn. Credit card balances were over $1 trillion when the pandemic began. We saw small upticks in credit card balances in February and March but a sharp drop in April as stimulus checks rolled out. The 28-billion-plus increase in May and June eclipsed anything we’ve seen since the pandemic began.