Consumer Borrowing Spiked In April

(CBS/AP)  Americans increased their borrowing in April at the fastest pace in 10 months as credit card spending and auto loans both picked up.

The Federal Reserve reported Wednesday that consumer borrowing rose at an annual rate of 5.9 percent in April, a significant increase from a 0.8 percent gain in March.

It was unclear, however, how long the rebound in borrowing would last given a decline in consumer confidence during May that was attributed to worries about soaring prices for gasoline and other energy products.

The 5.9 percent rate of increase for overall borrowing was the biggest gain since borrowing rose at a 6.8 percent rate in June of last year.

The increase in dollar terms was $10.6 billion, which pushed total consumer credit to a record $2.17 trillion. The Fed's measurement of consumer credit does not include mortgages and other loans secured by real estate.

The small 0.8 percent rise in March was revised down from an original estimate a month ago that borrowing had risen at a 1.4 percent rate during the month.

For April, consumer borrowing on credit cards and other types of revolving loans rose at an annual rate of 4.5 percent after having fallen by 2.3 percent in March.

Consumer borrowing for auto loans and other types of non-revolving credit rose at a rate of 6.7 percent in April after having fallen by 2.6 percent in March.

Economists are predicting that consumer spending, which accounts for two-thirds of total economic activity, will slow in coming months as gasoline costing around $3 per gallon leaves consumers with less to spend in other areas.

Also Wednesday, former Federal Reserve Chairman Alan Greenspan told the Senate Foreign Relations Committee that high oil prices, exceeding $70 a barrel and pushing gasoline costs beyond $3 a gallon in many areas, stem from a sharp decline in spare global oil production capacity, refinery shortages and, to some extent, market speculation.

But he said market speculators also have been able "to hasten the adjustment" to higher prices and eased the shock to the economy.