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The numbers: The amount of credit consumers used in May rose by a sharp $22.3 billion, but it slowed from the breakneck pace in the prior three months.
Economists had expected a $30 billion increase, according to the Wall Street Journal forecast.
Borrowing rose at a 5.9% annual rate in May, down from 9.7% in April and 12.7% in March. Credit surged to a record high in the spring, Federal Reserve data showed.
How much credit households use is seen as a good window into the strength of the economy. Consumers tend to borrow more when times are good and cut back when the economy is weak.
Key data: Revolving credit, like credit cards, increased at a 8.1% annual rate in May. That’s down from almost 20% in April, when many people were expecting to collect federal tax refunds.
Auto and student loans, known as non-revolving credit, climbed at a 5.2% pace. That category of credit is much less volatile.
The report does not include mortgages, the largest category of household debt.
Big picture: The soaring use of credit this year largely reflects Americans buying more goods and services — a show of strength for the economy.
High inflation and rising interest rates could also be forcing households to borrow more, however.
Whatever the case, borrowing is likely to taper off if the economy also slows. as it appears. Consumers typically cut back when times are tough and their financial security is threatened.
Market reaction: The Dow Jones Industrial Average
DJIA,
the S&P 500 index
SPX,
rose in Friday trades.
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