Consumer Credit in U.S. Fell by $1.3 Billion in June, Less Than Forecast

Consumer credit in the U.S. declined in June for a fifth straight month, a sign an uneven labor market is discouraging borrowing.

The $1.3 billion decrease in credit followed a revised $5.3 billion drop in May, the Federal Reserve said today in Washington. Economists projected a $5.3 billion decline in the measure of credit-card debt and non-revolving loans for June, according to the median forecast in a Bloomberg News survey.

Credit-card debt that dropped in June to the lowest level since October 2005 indicates consumer purchases, which account for about 70 percent of the economy, will be restrained as Americans rebuild savings. An increase in confidence to borrow and spend more depends on job gains after companies added fewer workers than forecast in July.

Today’s Fed report showed revolving debt, which includes credit cards, declined $4.5 billion in June to $826.5 billion, the lowest level since 2005.

Non-revolving debt, including loans for cars and mobile homes, rose $3.1 billion for the month. The report doesn’t track debt secured by real estate.

full story