Rising rate of credit for second month gives economists hope that economy is turning a corner

It has been revealed that US consumer credit saw an expansion during the month of May, as more Americans begin using their credit cards.  This was the first time in five months that the index saw growth.

During the month of May consumer credit rose by $17.12 billion, according to a report that has been issued by the Federal Reserve this week. This is significantly higher that the forecast figure of $8.5 billion that had been predicted by Wall Street experts.  The Federal Reserve also reported that April saw a larger than expected growth in this area too.

This news follows on the back of reports that June saw a poor hiring record from US employers as experts became concerned that the eurozone crisis was spreading and affecting the confidence of consumers in the US; however, this latest data means that this view will now have to be reconsidered.
Although credit data can often be misleading, as it can sometimes point to people using credit due to the fact that they are struggling economically, experts believe that the recent figures display a growing confidence in consumers after a long period of uncertainty.

Revolving credit, which includes credit cards, saw its biggest gain since November 2007 with a growth of $80.1 billion, while non-revolving credit, which includes student and car loans, also saw an increase during the month of May, growing by $9.10 billion.

The relatively new data series known as ‘consumer credit flows’ also showed an increase and, as this data is more sensitive to economic trends and their shifts, it is seen as a good indicator of returning confidence.  From $119.4 billion in April, the flow of consumer credit grew to $105.4 billion by the end of May.