There are no signs of weakness in U.S. consumption: In April, consumer credit surged, including the student loans that the market is most concerned about

While Wall Street is still debating the prospects of an economic recession, the latest data from the Federal Reserve shows that American consumers are borrowing and spending at an astonishing rate.

The Federal Reserve's G98 report indicates that in April, consumer credit surged from a revised $8.6 billion to $17.9 billion, more than doubling and marking the largest single-month increase since 2025, and also the second highest monthly growth since November 2023.

Among these, student loans soared to a historic high of $1.8 trillion, while millions of borrowers face the risk of large-scale defaults.

Some analysts argue that this data contradicts media narratives about "American consumers cutting back on spending due to recession fears." In fact, American consumers are doing what they do best: spending.

Surge in U.S. Consumer Debt and Historic High in Student Loans Raises Market Concerns

Data shows that in April, revolving credit (i.e., credit card debt) increased by $7.6 billion, far exceeding the $1.7 billion increase in March, reaching the highest level since December.

At the same time, non-revolving credit jumped by $8.3 billion, marking the second highest monthly increase since June 2023.

Despite auto loans contracting by $10 billion in the first quarter, the largest quarterly decline in a decade, student debt unexpectedly surged by $22 billion in the first quarter, reaching a historic high of $1.797 trillion. This phenomenon is particularly concerning as millions face the inability to repay student loans following the end of the repayment pause during the pandemic, with a wave of defaults looming.

Regarding investors' concerns about whether the Federal Reserve's interest rate cuts translate into lower credit card rates, the answer is disappointing. Data shows that despite significant rate cuts by the Federal Reserve, these measures have not translated into a decrease in consumer debt costs.

Overall, as millions of former "students" are on the brink of large-scale defaults, student loans once again become a driving force behind consumer spending, a phenomenon that warrants close attention. Whether this debt-driven consumption model can be sustained, and when a reckoning will occur, may become key variables determining the direction of the U.S. economy