Tuesday, September 11, 2012
WASHINGTON (AP) — Americans cut back on borrowing in July for the first time in nearly a year. Credit card use fell for the second straight month, suggesting many consumers remain cautious in the face of high unemployment and slow growth.
Total consumer borrowing dipped $3.3 billion in July from June to a seasonally adjusted $2.705 trillion, the Federal Reserve said Monday. It was the first decline since August 2011. The drop in credit card debt offset a small rise in a measure of auto and student loans.
The Fed also said Americans have borrowed much more than previously estimated after it revised consumer borrowing data back to December 2010. June’s figure was increased to $2.708 trillion, or $130 billion higher than initially thought. It’s also well above pre-recession levels.
Consumer debt declined even though Americans boosted their spending in July by the most in five months, according to government data released last week.
Still, the job market has weakened substantially from the start of the year, which is keeping downward pressure on spending. In August, employers added just 96,000 jobs, down from 141,000 in July and well below the average 226,000 jobs a month in the January-March quarter.
Consumers have been using credit cards much less since the 2008 credit crisis. Four years ago, Americans had $1.03 trillion in credit card debt, an all-time high. In July, it was $850.7 billion — or 17 percent lower.
During that same time, student loan debt has increased dramatically. The category that includes auto and student loans, along with other loans for items such as boats, has jumped to $1.85 trillion from $1.56 trillion in July 2008.
Much of the increase in student loans is a result of high unemployment, which has led many Americans to seek better education and skills in a more competitive labor market.