Consumer Credit Increases at 10.2% Annual Rate During June

Americans took out $5.4 billion more in credit than they paid off in June as the growth in consumer credit increased at the fastest rate in five months, the government said Friday.

The Federal Reserve Board said consumer credit expanded at an annual rate of 10.2% in June, compared to a rate of 5.7% in May and 7.3% in April. It was the steepest increase since a 12.2% rise in January.

“The consumer is coming back,” said Michael K. Evans, a private economist in Washington. “Consumers have finally gotten rid of the last vestiges of any worries over the stock market.”

Evans said consumer spending, and thus consumer borrowing, had been held back by larger-than-usual income tax bills in April and smaller-than-usual tax refunds in May.

“June was back to normal,” he said.

For the first six months of the year, borrowing grew at a 9.4% annual pace, compared to 7.2% growth in 1987.

Growth in June was led by a $2.8-billion rise, a 20.2% annual expansion pace, in revolving credit, which includes credit card debt and borrowing from department stores, where sales were particularly strong. Revolving credit was up 12.9% in May.

Automobile credit grew by $2.4 billion, a 10.4% annual rate, rebounding from the increase at a 3.7% rate in May.

The credit report said the category that includes bank and credit union loans not secured by real estate grew by $376 million, a 2.8% annual rise, compared to 2.9% in May.

The various changes left total consumer debt at $638.6 billion, up 9.1% from a year ago.