Americans borrowed more in April to attend college and buy cars, and were a little less cautious with their credit cards than the previous month.
The Federal Reserve said Friday that consumer borrowing rose $11.1 billion in April from March, to a seasonally adjusted $2.82 trillion. That’s the 20th straight monthly gain and another record level.
Nearly all of the gain came from a category that includes auto and student loans, which increased $10.4 billion to $1.97 trillion.
A measure of credit card debt rose $682 million to $850 billion. While that’s only a modest gain, it follows a decline of $906 million for the category in March.
The credit report doesn’t separate auto loans from student loans. But according to quarterly data compiled by the Federal Reserve Bank of New York, student loan debt has been the biggest driver of borrowing since the Great Recession ended in June 2009. Student loans reached $986 billion in the first three months of this year. That’s up from $675 billion in the second quarter of 2009.
The Federal Reserve’s aggressive efforts to lower long-term interest rates have also made auto loans more attractive in recent months.
Greater credit card borrowing could help boost consumer spending, which accounts for 70 percent of economic activity. But consumers have been hesitant to run up high-interest debt since the recession. And many are likely to stay cautious this year, because higher Social Security taxes have reduced most paychecks.
The measure of card debt in the Fed’s report has risen by $4 billion this year. Paul Edelstein, director of financial economics at Global Insight, noted that those gains are small when compared with annual gains of $25 billion to $50 billion before the recession.
And the total level of credit card debt in April was still nearly 17 percent lower than the all-time high of $1,022 trillion reached in July 2008.
“Households remain cautious,” Edelstein said.
Rising home prices and steady job growth have helped offset some of the impact of the tax increase. Employers added 175,000 jobs in April. That almost exactly matched the average increase of the previous 12 months: 172,000.
Consumers increased their spending from January through March at the fastest pace in more than two years. However, they had to trim the pace of their savings to finance their purchases. After-tax income dropped at an annual rate of 7.5 percent in the first quarter. That drop reflected in part the increase in Social Security taxes that took effect on Jan. 1.
A person earning $50,000 a year will have about $1,000 less to spend this year. A household with two highly paid workers will have up to $4,500 less.
The overall economy grew at an annual rate of 2.4 percent in the January-March quarter. The expectation is that growth is slowing in the April-June quarter to 2 percent or less.
The Federal Reserve’s borrowing report covers auto loans, student loans and credit cards. It excludes mortgages, home equity loans and other loans tied to real estate.