07/09/18: The Federal Reserve reported today that Americans took on more debt during May, the latest month for which data are available, than during the prior month and the same month a year ago.
Specifically, the Fed reported that Americans increased their installment debt, which is used primarily to purchase long-lasting durable goods, such as household appliances, furniture and automobiles, by 0.5% during May, as compared to the prior month, and by 4.6%, as compared to the same month a year ago. That’s a positive development because Americans tend to increase their installment debt when they’re optimistic about their personal financial situations, job prospects and future direction of the overall economy.
Last month’s increase in installment debt also bodes well for the near-term future direction of U.S. stock prices, in general, as stocks tend to move in the same direction as installment debt.
Meanwhile, the Fed reported that revolving debt, which includes credit card debt, rose during May by 0.9%, as compared to the prior month, and by 5.2%, as compared to the same month a year ago.