Consumer borrowing rose in June as American households took out auto and student loans.
The $17.3 billion increase in consumer credit followed a $19.6 billion May advance, the Federal Reserve reported today in Washington. Non-revolving loans, including borrowing for cars and college tuition, climbed $16.3 billion.
Stronger employment and gains in home values are giving households the confidence to borrow and make big-ticket purchases such as cars and appliances. Banks also are showing greater willingness to lend, which could boost consumer demand, the biggest part of the economy.
“Consumers are gradually feeling more comfortable borrowing and lenders are a little more comfortable lending,” Gus Faucher, senior economist at PNC Financial Services Group Inc. in Pittsburgh, said before the report. “That’s going to be good for growth.”
The June increase in credit compared with an $18.7 billion median forecast in a Bloomberg survey. Estimates of the 34 economists polled ranged from increases of $10 billion to $22.7 billion. The report doesn’t track mortgages, home-equity lines of credit and other debt secured by real estate.
Credit probably continued to expand in July. Strong demand for sport-utility vehicles sent Ford Motor Co.’s U.S. sales up 9.5 percent last month from the same month in 2013, pushing deliveries toward the best year since 2006. Motor vehicle sales last month cooled to a 16.4 million annualized rate from an eight-year high of 16.9 million in June, according to data from Ward’s Automotive Group.
Federal government lending to consumers, comprising mainly educational loans, increased $5.4 billion in June from the prior month before adjusting for seasonal variations.
Revolving credit, which includes credit-card balances, rose $941.5 million, the smallest advance since February, after a $1.74 billion gain in May, today’s figures showed.
Some banks are showing a greater willingness to extend credit cards and finance car purchases amid growing demand and rising competition, according to a quarterly Fed survey of senior loan officers released Aug. 4.
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