Consumers in the United States curbed their credit card spending in July, making it the second straight month that credit card use dropped. It suggested that consumers remained cautious due to the slow economic growth as well as high unemployment rate.
Total consumer borrowing dropped $3.3 billion in July from June to a seasonally adjusted $2.705 trillion. This is according to the Federal Reserve. It was the first decline since August 2011. The decrease in credit card spending offset the small increase in a measure of student and auto loans.
The Fed announced that Americans borrowed a lot more than previously estimated after the agency modified its consumer borrowing data back to December 2010. The figures from June were increased to $2.708 trillion, which is $130 billion higher than initially estimated. It was above pre-recession levels.
Consumer loans dropped even if Americans improved their spending in July by the most in five months. The job market is still weak, which is keeping the pressure on consumer spending. According to the latest jobs report, employers added 96,000 jobs in August. This is down from 141,000 in July and below the average 226,000 jobs a month in the first quarter.
Consumers have been using credit card less since the 2008 credit crisis. Americans had $1.03 trillion in credit card debt four years ago. In July, the credit card debts for US consumers were $850.7 billion or 17 percent lower. At the same time, student loan debt has increased. Loans, which include student, auto and boat loans, went up to $1.85 trillion from $1.56 trillion in July 2008.
During the second quarter of this year, student loans totaled $914 billion according to a report from the Federal Reserve Bank of New York that was released two weeks ago. That was up from $611 billion in the third quarter of 2008, an increase of almost 50 percent over the last four years.
Source: http://www.paydayloansmag.com/us-consumers-use-credit-card-less-for-second-straight-month/
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