Consumers Slow Borrowing as Economic Sentiment Drifts
Total consumer credit increased at a seasonally adjusted annual rate of 4.4 percent in July, according to data released by the U.S. Federal Reserve on Monday. Non-revolving credit once again led the increased, climbing at a rate of 7.4 percent, while revolving credit — credit that is automatically renewed when debt is paid off — contracted 2.6 percent.
Total outstanding credit increased by $10.4 billion to $2,852.1 billion, a function of a $12.2 billion increase in non-revolving credit — mostly car and student loans — and a $1.8 billion decrease in total revolving credit issued.
Revolving credit growth, one indicator of consumer confidence and spending, has been touch for most of the recovery. Revolving credit grew at an annual rate of just 0.2 percent in 2011 and 0.4 percent in 2012, and second-quarter growth was recently revised downward to 1.2 percent. The graph below shows total consumer credit in red and the finance rate on 48-month consumer installment loans (such as auto loans) in blue.