Americans cut back on credit card use for 3rd month
WASHINGTON — Americans cut back on using their credit cards in August for a third consecutive month, a sign that consumers remain cautious about spending.
Consumers increased their borrowing $13.6 billion in August to a seasonally adjusted $3.04 trillion, the Federal Reserve said on Monday. That's a record, and it followed a gain of $10.4 billion in July.
Once again, the increase in borrowing was driven entirely by auto and student loans. A measure of those loans rose $14.5 billion to $2.19 trillion.
But credit card debt dropped $883 million to roughly $850 billion. The decline could hold back consumer spending, which accounts for roughly 70 percent of economic growth.
The report highlighted trends that have surfaced in the post-recession economy.
The measure of auto and student loans has risen 8.2 percent from a year ago and in every month but one since May 2010. But credit card debt is essentially where it was a year ago. And it is 16.9 percent below its peak hit in July 2008 — seven months after the Great Recession began.
Slow but steady job growth and small wage gains have made many Americans more reluctant to charge goods and services. Consumers may be hesitant to take on high-interest debt because they are paying higher Social Security taxes this year.
At the same time, the weak economy is persuading more people to attend college. The Federal Reserve Bank of New York quarterly report on consumer credit shows student loan debt has been the biggest driver of borrowing since the Great Recession officially ended in June 2009.
The economy grew at a modest 2.5 percent annual rate in the April-June quarter. Most economists expect growth slowed in the July-September quarter to an annual rate of about 2 percent or less, held back in part by weaker growth in consumer spending.
Analysts had thought that consumers would step up spending and help drive faster growth in the final three months of the year. But a partial government shutdown has lasted a week and will leave hundreds of thousands without paychecks.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Researchers: U.S. lacks proving ground for nuclear energy innovations
- Wolf reverses Corbett, says deal between Highmark, UPMC doesn’t limit continuity of care to very ill
- Race toward bigger phones eases
- Big banks’ levels of capital strong, Federal Reserve finds
- Americans see improved job market but a vulnerable economy, Pew poll finds
- AbbVie to buy leukemia drugmaker Pharmacyclics for $21 billion
- IPO might test Etsy’s approach to commerce
- Mud serves as multipurpose tool in $100B shale industry
- Worker productivity falls faster than estimated; labor costs rise
- Stocks snap losing streak as ECB reveals stimulus start date
- Esmark sues Slovakian businessman for $100M, alleges sabotaged deal