A report released this afternoon by the Federal Reserve Board of Governors showed that Americans’ borrowing activity improved in July (lagged release). Specifically, total consumer credit outstanding rose by $16.64 billion in July to $3,918.01 billion. That was nearly double June’s downward-revised gain and larger than expected. However, most of the increase was due to non-revolving credit (student and automobile loans), which rose by $15.39 billion.
Revolving credit (consumers’ credit cards), on the other hand, lifted by just $1.25 billion in July, somewhat disappointing following June’s $1.17 billion decline. Moreover, revolving credit growth has continued to slow this year even after the usual post-holiday reversal. Some economists as a result are worried about the sustainability of consumer spending, the largest component of the economy (GDP), although others are hopeful that rising wages are offsetting such weakness. The retail sales report for August out this Friday will help shed some light on the issue.
Sources: Econoday, FRBG, FRBSL
Post author: Charles Couch