A new report by the Federal Reserve Thursday shows that consumer credit, the amount advanced to individuals for purchases, spiked by $41.8 billion across the U.S. in February. The rise is significantly higher than the $8.9 billion increase in January.
The jump was fueled by a more than 20% rise in the use of revolving credit, notably credit cards. Non-revolving credit, including auto and student loans, rose more than 8% in February.
Economists say the data points to Americans increasingly turning to credit cards to meet everyday expenses.
“You’ve got a nearly 8% inflation rate, which is rising faster than people’s incomes,” said Stephen Moore, a former economic advisor to President Donald Trump. “People are actually losing purchasing power because inflation is like a tax on earnings.”
“In the end, people have to spend more to get the things that they want and that’s a major factor in this increase in debt,” he said.
Over the past year, inflation has soared by 7.9% — the fastest rate in more than 40 years. The effects are being seen across the board, but especially when it comes to the prices of everyday goods.
Gasoline prices are up by 38% since February 2021. Food costs, meanwhile, rose by 7.9%.