U.S. Consumers Show Signs of Caution with Debt in August
Americans added to their debt at a slower pace in August, suggesting some caution on the part of consumers.
Outstanding consumer credit, a reflection of all debt besides mortgages, rose $16 billion or at a 5.6% annual rate in August, the Federal Reserve said Wednesday. That’s less than in July, when it increased at an annual rate of 6.6%, a slight downward revision from the initial estimate of 6.7%. In June, it rose at an annual rate of 9.6%.
Economists surveyed by The Wall Street Journal had expected a $20 billion increase in August.
Revolving credit, mostly credit cards, rose at an annual rate of 5.3%, a bit less than in July, when it rose at a downwardly revised annual rate of 5.5%.
Nonrevolving credit, made up largely of auto or student loans, rose at an annual rate of 5.7%, its lowest percentage increase since July 2012.
U.S. households increased their personal spending in August as incomes rose, the Commerce Department said in late September. This suggested that consumers could continue to support the economy despite turbulence in financial markets and slowing overseas growth. The Conference Board also reported in late September that their consumer confidence index improved slightly in September from August.
But more recent data on the labor market suggest a slowing pace of job gains, which could eventually affect Americans’ willingness to borrow and spend. Employers added a modest 142,000 jobs in September, while gains in July and August were revised down by a combined 59,000 positions, the Labor Department said earlier this month.