US consumer borrowing increased in June by more than forecast on the biggest gain in non-revolving credit in eight months.
(Bloomberg) — US consumer borrowing increased in June by more than forecast on the biggest gain in non-revolving credit in eight months.
Total credit rose $17.8 billion on the heels of the smallest monthly increase since 2020 in the prior period, Federal Reserve data showed Monday. The figure, which isn’t adjusted for inflation, exceeded the $13 billion median forecast in a Bloomberg survey of economists.
Non-revolving credit, such as loans for school tuition and vehicle purchases, jumped $18.5 billion following a modest advance in the prior month. Auto sales increased in June from a month earlier, according to separate data.
The Fed’s survey showed that the value of loans for vehicle purchases increased to a fresh record in the second quarter. Student loans, meanwhile, fell.
Revolving credit outstanding, which includes credit cards, decreased $604.5 million, the first decline in more than two years.
The unexpected durability of consumer spending has proved to be a key support for the economy despite high interest rates, thanks to low unemployment and steady wage growth. That said, prices remain much higher than they were a year ago for a range of goods and services, straining household budgets and pushing up delinquency rates.
The decline in revolving credit outstanding suggests Americans may be starting to cut back. If sustained, a broader spending pullback could threaten the expansion.
While a growing number of economists now expect the US to avert recession, opinions remain divided. One looming headwind for millions of consumers is the resumption of student loan payments this fall after a three-year pause. The average monthly payment is about $400.Â
Read more: BofA Joins Fed in Reversing Recession Call Amid Growing Optimism
–With assistance from Jordan Yadoo.
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