While strong consumer spending and borrowing has kept the economy afloat, there is some evidence that consumers may be entering a cautionary period with regard to credit cards. For the first time in four years, consumer borrowing for big-ticket items, such as automobiles, has declined. Revolving credit, mostly credit card debt, is also beginning to slow, according to preliminary figures released this week by the Federal Reserve. During June, non-revolving debt declined $3.8 billion, or at a negative annual rate of 5.2%. Meanwhile, American consumers added $2.3 billion to total revolving debt, the smallest monthly increase so far this year. As a result, revolving debt, 95% of which is credit card debt, slowed to an annual growth rate of 3.9% during June. During June 2000, consumer revolving debt increase by $5.8 billion. The slowing pace has been attributed to rising unemployment and may signal an impending slowdown in other borrowing, including new mortgages. Total U.S. revolving consumer debt now stands at $703.4 billion which includes about $675 billion in credit card debt. Overall, consumer debt declined 1.2% during June. At the end of June, American consumers were $1.590 trillion in debt, exclusive of home mortgages.
REVOLVING CREDIT HISTORICAL ($billions) Jun01 May01 Apr01 Mar01 Feb01 Jan01 Dec00 %GRWTH: 3.9% 6.0% 14.2 11.9 20.8 11.6 5.0 $OWED: $703.4 701.1 697.6 688.2 681.4 670.3 663.4 Nov00 Oct00 Sep00 Aug00 Jul00 Jun00 May00 %GRWTH: 10.9% 4.7% 7.8 12.6 6.7 11.2 12.7 $OWED: $660.6 654.8 649.3 645.1 638.2 634.7 628.9 Source: Federal Reserve; revised figures as of 08/07/01; For complete historical data visit www.carddata.com.