Consumer credit jumped by a seasonally adjusted 3.1% annual rate in April, the seventh consecutive monthly gain, according to the Federal Reserve's monthly G.19 report released Tuesday.

Total consumer debt increased $6.25 billion to $2.43 trillion in the month, a larger gain than what Wall Street economists expected. It also topped the $4.8 billion gain seen in March.

But the recent increases largely have been one-sided, fueled almost entirely by non-revolving credit – mostly coming from student loans and auto loans.

Non-revolving credit has risen for nine straight months, up $7.2 billion in April. Meanwhile, revolving credit (i.e. 98% credit cards) declined $0.9 billion during the same period. Credit card borrowing generally has declined for more than two years as consumers steadily have paid down debt and taken out fewer credit card loans, analysts say.

What's more, the upswing in non-revolving credit may not mean consumers are recovering. Student loan borrowing does not reflect household consumption and a rise in auto purchases the past several months may not suggest higher consumer demand as some analysts have stated that many of those purchases are simply households replacing older vehicles after not having done so for a while.

Recent auto figures also show the industry could be cooling down amid tighter supplies following Japan's natural disaster and higher prices. Automakers sold about 1.1 million vehicles in May, 3.7% less than a year earlier and 8.3% less than the previous month, according to Autodata Corp.

Ultimately, sustainable gains in consumer credit will occur only with an improvement in the jobs picture, a point Federal Reserve Chairman Ben Bernanke underscored in a speech on Tuesday: "Developments in the labor market will be of particular importance in setting the course for household spending. As you know, the jobs situation remains far from normal."

To comment, contact Darren Waggoner at 815.463.9008 or darren.waggoner@sourcemedia.com.

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