Consumer Debt Surges In April As Student Debt Soars

The latest consumer credit data from the Fed shows that consumer credit growth more than doubled in April, reaching $17.9 billion, the single biggest monthly increase of 2025 and the second highest since November 2023. This contradicts the notion that US consumers are reducing their spending due to recession fears. Revolving credit, including credit card debt, rose by $7.6 billion, the highest since December. Non-revolving credit jumped by $8.3 billion, the second highest monthly increase since June 2023. Student debt, which is causing widespread defaults, surged by $22 billion in Q1 to $1,797 billion, a new all-time high. This increase in student debt is propelling consumer spending, despite millions of former students being unable to pay their loans. The recent Fed rate cuts have not translated into lower interest APRs on credit cards. The student loan bubble may not accelerate the recession, but instead, it may have the opposite effect as the government starts providing more loans to individuals. The data suggests that the government is taking a page from the previous administration's playbook and providing loans to anyone who can fog a mirror. The consumer credit data will be closely watched to see how it affects the economy.