WASHINGTON — Americans cut back on their credit card use in July for the second straight month, suggesting many 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. 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 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.
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.
The economy is growing too slowly to boost business and consumer confidence and spur sustained gains in spending and hiring. Overall economic growth slowed to an annual rate of just 1.7 percent in the April-June quarter and analysts don’t expect much of a pick-up for the rest of the year.
Overall, Americans have been steadily reducing debt since the financial crisis. Household debt, including mortgages and home equity lines of credit, has declined for 16 straight quarters to $12.9 trillion in March, according to a separate Fed survey on consumer finances. That’s down from $13.8 trillion in March 2008.
Some of that debt has been removed by defaults, such as foreclosures. But Americans are also paying down debts.
The Fed’s monthly consumer credit report covers auto loans, student loans and credit cards. Unlike the quarterly Fed report, it excludes mortgages, home equity loans and other loans tied to real estate.