The latest report by the Federal Reserve on Monday shows that consumer credit increased at an annual rate of 6.4 percent for the month of May, a huge increase over the 1.1 percent it grew in April.
Most of the increase was related to credit card and auto loan debt, which grew strongly over the April numbers. Credit card debt grew by 9.8 percent in May, in contrast to the flat 0.2 percent in April. Auto loans increased by 4.4 percent during the same time, while only growing by 1.7 percent in April.
"April consumer credit surprised us by being weaker than expected, and the May performance was stronger than expected," said David Wyss, chief economist at Standard & Poor's in New York.
As far as how much this represents, consumer borrowing reached $12.9 billion, to bring it to a total of $2.44 trillion. Most economists thought borrowing would grow by about half that much at $6.5 billion.
The reason this is happening is the drying up of funds formerly accessed through refinancing their houses. With standards tightening and home values slowing down, it's becoming harder and harder to do.
This indicates that consumers in the U.S. are still in the spending mode, with no end in sight. This is continued good news for retailers, which had sales surge by 1.4 percent in May, the largest increase in over a year.
Economists think the strong employment environment, along with continued consumer spending will have the gross domestic product growing at a 3.5 percent clip or better.
It looks like people in the U.S. simply won't be denied their continual spending habits.
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