US consumer credit rose in May -- report

The rise is a positive signal for a country which is still reeling under the aftermath of the 2008-09 economic recession.

Revolving credit increases
Ever since the start of the recession, credit-card debt had registered a fall, as many consumers repaid debt.

According to the Federal Reserve report released Friday revolving credit, which includes credit card debt, increased by $3.36 billion to $793.13 billion in May.

The central bank’s data also revealed that non-revolving debt, which includes educational loans, spiked by $1.71 billion for the month. This debt had risen by $6.54 billion in April.

This debt had registered a fall of $877 million in April. May’s rise represents the biggest gain since June 2008.

Experts opine rising gasoline prices may have led consumers to ramp up credit-card debt. At the same time, rising unemployment would have thwarted households from spending on big- ticket items.

Non revolving credit
The central bank’s data also revealed that non-revolving debt, which includes educational loans, spiked by $1.71 billion for the month. This debt had risen by $6.54 billion in April.

“Even though we’re moving higher, we still have a long way to go. People that do have jobs are perhaps feeling a little bit more secure in them and they feel a little bit more comfortable about taking on debt,” Brian Jones, an economist at Societe Generale in New York was quoted as saying in Bloomberg.

Consumer spending is crucial to economic performance of the country. The latest findings of the Federal Reserve gain monumental importance since wages haven't gone up significantly over the past year.

The health of the housing sector coupled by high unemployment levels is hurting consumer sentiment.