WASHINGTON (Reuters) - Consumer credit grew by $7.39 billion in September after falling a revised $9.68 billion in August, boosted by a category that includes student and new-car loans, a Federal Reserve report on Monday showed.
That beat forecasts by economists surveyed by Reuters for a $5-billion gain in September outstanding consumer credit.
Revolving credit, which mostly measures credit-card use, fell $627.1 million — a third straight monthly decline after drops of $2.26 billion in August and $3.40 billion in July.
Revolving credit doesn’t take into account debt secured by real estate, like home mortgages and lines of credit.
Nonrevolving credit, which includes auto loans, rose $8.01 billion in September after a revised $7.42 billion decrease in August.
Analysts said the rise in nonrevolving credit reflected in part an accounting change seen since mid-2010 that stems from health-care reform and moved student lending away from banks and toward direct lending from the federal government.
Otherwise, said New York-based Troy Davig of Barclay’s Capital, the third straight monthly decline in revolving credit points to wariness about borrowing to spend.
“Overall, the report suggests that most consumers are continuing to be cautious in terms of assuming new debt,” Davig said.
Gregory Daco, chief U.S. economist for IHS Global Insight, suggested it was no surprise consumers were reluctant to incur debt.
“Households continue to prefer cash over credit as employment, income and wealth prospects remain feeble,” Daco said.
The broad trend in revolving credit over the past three years has been toward reducing credit-card use as consumers seek to pay down debt, or deleverage, in the wake of the 2007-09 financial crisis.
In the 36 months since September 2008, revolving credit has risen in just four months and has been paid down in 32 of those months.
Reporting by Glenn Somerville; Editing by Andrew Hay