U.S. consumer borrowing grew significantly for the second consecutive month, marking the largest consecutive increase since 2022.

Consumer borrowing in the United States surged again in April, marking a substantial increase for the second consecutive month and the largest continuous growth since the end of 2022. Data released by the Federal Reserve on Friday showed that outstanding consumer credit in the U.S. increased by $20.7 billion in April, above the economists' median forecast of an increase of $17.7 billion; the revised increase for March was $22.2 billion. Of this, non-revolving credit, including auto loans and education loans, increased by $9.1 billion in April. Credit card debt and other revolving credit balances rose by $11.6 billion. The report does not include home mortgage loans. With rising gasoline prices eroding income, many Americans are facing additional financial pressure. Despite signs of a strengthening labor market, wage growth is losing momentum, which may prompt some consumers to maintain their spending levels by increasing borrowing or tapping into savings. However, for Americans carrying balances on credit cards, the high interest rates charged by credit card accounts are posing a significant financial burden. As of February (the most recent month for which data is available), the average interest rate on interest-bearing credit card accounts is 21.5%. Borrowers are unlikely to see relief in the near term. Market expectations currently suggest that the Federal Reserve will raise interest rates before the end of the year to combat the rekindled inflation sparked by the conflict in the Middle East. Interest rate swap markets indicate that traders expect the Fed to raise rates by 25 basis points before the December policy meeting, with a probability of around 60% for a rate hike in October. Data released by the US Bureau of Labor Statistics on Friday showed that nonfarm payrolls increased by 172,000 in May, exceeding all economists' expectations, while the April figure was revised significantly from 115,000 to 179,000, marking the strongest job growth in over two years in the US; the unemployment rate has remained at 4.3% for the third consecutive month. Strong job growth, coupled with high energy prices, may further increase pressure on the Federal Reserve to consider raising interest rates to curb inflation. Several Fed officials have already stated that they cannot support a rate cut as long as US inflation remains consistently above the 2% target and continues to diverge. In recent weeks, these officials have also become more open to the idea of further rate hikes.