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Consumer credit growth slows to nearly six-year low in April

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Growth in student loans is a major factor in rising consumer
credit

Consumer borrowing decelerated in April to the smallest
increase in almost six years, suggesting an expected rebound in
spending in the second quarter may not be as robust as hoped.

Total consumer credit rose $8.2 billion in April to a
seasonally adjusted $3.82 trillion, posting an annual growth
rate of 2.6%, the Federal Reserve reported
Wednesday.
This is down from a revised $19.5 billion gain
in March.

The April increase was also well below economist estimates for
a $17 billion gain in consumer credit, according to Econoday,
and is the slowest monthly growth rate since August 2011.

The main source of credit growth, nonrevolving credit, which
covers loans for education and cars, slowed sharply in April.
This category rose at a tepid annual rate of 2.9% in April,
which was also the slowest pace since August 2011.

Vehicle sales were the second-lowest in more than a year,
according to separate figured from Autodata.

Revolving credit, which is mostly made up of credit card loans,
increased at an annual rate of 1.8% in April, compared with a
rise of 6.5% in March.

Economists are watching the consumer closely as they expect
spending to drive growth in the remainder of 2017 after the
weak start to the year.

Consumer spending, which accounts for two-thirds of U.S.
economic growth, rose at a 0.6% annual rate in the first
quarter, down from fourth-quarter growth of 3.5%. As a result,
first quarter GDP growth rose at a weak 1.2% annual rate.

Economists have predicted consumption would pick up in the
second quarter given the low unemployment rate and improving
household balance sheets.

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