Total consumer credit saw a smaller increase in July, according to the Federal Reserve. The rise of $10.4 billion is a slowdown from the previous month’s gain of $14 billion. Economists had expected a larger increase of $16 billion. This translates to an annual growth rate of 2.5%, down from the revised 3.4% gain in the previous month.
Revolving Credit Rebounds
Revolving credit, which includes credit cards, experienced a significant rebound of 9.2% in July. This follows an unusual 0.8% drop in June, marking the first decline since April 2021.
Nonrevolving Credit Shows Modest Growth
Nonrevolving credit, typically comprising auto and student loans, grew by a meager 0.3% in July. This is a decrease from the previous month’s growth rate of 4.8%. Nonrevolving credit is known to be less volatile compared to other categories of credit.
Mortgage Loans Not Included
The data provided by the Federal Reserve does not encompass mortgage loans, which represent the largest portion of household debt.
Consumer Spending on the Rise
Government data indicates that consumer spending has increased in the third quarter. While there are concerns regarding low-income workers, overall credit conditions remain relatively favorable after the pandemic.
Excess Savings Depleting
Some Federal Reserve officials believe that the excess savings accumulated during the stay-at-home period are now running out. This observation suggests a potential shift in consumer behavior and financial dynamics.
On Friday, stocks were trading slightly higher, with DJIA and SPX showing positive movement. The yield on the 10-year Treasury rose to 4.27% (BX:TMUBMUSD10Y).