US Consumer Credit Increases at Slower Pace in June

Thursday, 07 Aug 2014 03:48 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink

U.S. consumers expanded their borrowing at a slower rate in June compared with the prior month.

Overall credit rose by $18.3 billion in June to a total of $3.17 trillion, the Federal Reserve said Thursday. The rise was down from a gain of $21.5 billion in May.

The smaller increase suggests that consumers remain sheepish about spending, which could limit how fast the economy can grow. Rising debt loads are generally a sign of greater confidence in the economy and fuel faster growth.

Auto and student loans drove much of the gains in June, up $16.2 billion. They have risen 8.4 percent from a year earlier.

Credit card debt increased by a slight $2.1 billion in June. The increase in credit card debt in the past year has been 1.3 percent, evidence that consumers are restrained.

Americans still have a limited appetite for debt after gorging themselves on sub-prime mortgages and credit cards before recession seized the country in late 2007.

When the rate of borrowing increases, growth usually accelerates. People increase their spending on the assumption that they will have income to repay the debt, kicking off a cycle that leads the economy to grow faster and potentially overheat.

The most recent credit cycle was broken by the housing bust and the Great Recession. Millions of people lacked the income to pay their mortgages, in some cases because they lost their jobs following the downturn that began in late 2007.

Americans have remained hesitant to take on debt since the financial crisis. Consumer spending growth has averaged a tepid 2.2 percent a year during the recovery, compared with a 2.9 percent average during the previous expansion.

The average household debt-to-income ratio has fallen to 77 percent from the 2008 peak of 95 percent, according to analysis by the bank HSBC. That debt ratio remains higher than the 69 percent average in 2001.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Morningstar's Miller: Utility Stocks Look Good for the Long Run

Wednesday, 01 Oct 2014 19:32 PM

The utilities sector was the only one of the 10 Dow Jones sector indices to post a gain in Wednesday's stock market rout . . .

Casino Mogul Wynn: 'I'm More Scared About US Than China'

Wednesday, 01 Oct 2014 19:13 PM

Steve Wynn, CEO of Wynn Resorts, which earns a majority of its revenue in the Chinese territory of Macau, isn't too worr . . .

MercBloc's Dicker: Oil 'On Its Way to $140' a Barrel

Wednesday, 01 Oct 2014 18:59 PM

U.S. crude oil prices fell to a 17-month low Wednesday at $90.73, but Dan Dicker, president of money manager MercBloc an . . .

Most Commented
Top Stories

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved