WASHINGTON (AP) – Americans cut back on using credit cards in August for a third straight month, a sign consumers remain cautious about spending.
Consumers increased their borrowing $13.6 billion in August to a seasonally adjusted $3.04 trillion, the Federal Reserve said Monday. That’s a record and it followed a gain of $10.4 billion in July.
Once again, the increase in borrowing was driven entirely by auto and student loans. A measure of those loans rose $14.5 billion to $2.19 trillion.
But credit card debt dropped $883 million to roughly $850 billion. The decline could hold back consumer spending, which accounts for roughly 70 percent of economic growth.
The report highlighted trends that have surfaced in the post-recession economy.
The measure of auto and student loans has risen 8.2 percent from a year ago and in every month but one since May 2010. But credit card debt is essentially where it was a year ago. And it is 16.9 percent below its peak hit in July 2008 – 7 months after the Great Recession began.
Slow but steady job growth and small wage gains have made many Americans more reluctant to charge goods and services. Consumers may also be hesitant to take on high-interest debt because they are paying higher Social Security taxes this year.
The Federal Reserve Bank of New York quarterly report on consumer credit shows student loan debt has been the biggest driver of borrowing since the Great Recession officially ended in June 2009.