Consumer credit posts tepid growth in June
WASHINGTON (Reuters) - U.S. consumer credit posted its weakest growth in eight months in June as Americans reduced credit card debt, a potentially negative sign for an economy that has struggled to create jobs.
Consumer credit grew by $6.46 billion in June, the Federal Reserve said on Tuesday. That was well below the $11 billion advance Wall Street economists had forecast in a Reuters poll.
The Fed also said credit climbed slightly less during May than originally thought.
Credit has been expanding since late 2010 as the country recovered from the 2007-09 recession and on Monday the Fed said a number of banks eased loan standards on auto and credit card loans over the last three months.
In June, however, the overall expansion of consumer credit was the smallest since October 2011.
The data follows a report on Friday that showed U.S. employers hired the most workers in five months in July, but that a trend of weak hiring has been unable to reduce the unemployment rate, which rose to 8.3 percent last month.
That kept prospects for further action by the Fed to lower borrowing costs in order to expand credit and boost economic growth on the table.
In June, revolving credit, which includes credit cards, shrank by $3.7 billion.
Credit data can be tricky to interpret because cutting back on debt is not always a sign of pessimism. People might use their credit cards less because they are earning more money.
Non-revolving credit increased by $10.15 billion in June from a month earlier. Part of that increase appeared to be driven by student loans made by the government, which grew 29.9 percent from June 2011, slightly less than the 12-month growth posted in May.
Student debt has soared since the recession, fueling worries these borrowers might get over their heads and could someday struggle to pay their debts. Still, year-over-year growth in student borrowing has been cooling and is no longer nearly as fast as in 2009.
Consumer credit flows -- a relatively new data series that the Fed says is more sensitive to economic trends -- also cooled in June. The flow of consumer credit fell to an annual rate of $77.5 billion in June. In May, that rate was $200.4 billion, the Fed said.