US credit card spending drops for 6th straight month, consumer borrowing fell $7.2bn
by SOURAV D | VIEW 1559
On Wednesday, US Federal Reserve data on consumer borrowing had unveiled an upscaled extent of caution among the American citizens as US consumers appeared to have trimmed their borrowings in August and credit card spending fell for the sixth consecutive month in a row. In point of fact, latest US Fed data on Consumer Borrowing, a closely followed indicator to American nationals’ intent to bring in more debts in order to back their expenses that accounts for more than two-thirds of entire economic activity in the United States, released late on Wednesday had revealed the total borrowing was tottered $7.2 billion in August following a gain of $14.7 billion in July. Notably, a decline in US Consumer Borrowing in August had marked up its first depreciation since a record $12 billion fall recorded in May when the global-scale pandemic outbreak had nearly grounded the US economy.
US Consumer Borrowing falls $7.2bn in August as credit card spending led declines
In factuality, according to US Fed data released late in the day, much of the weaknesses in consumer borrowing had been led by a $9.4 billion decline in the categories that cover credit card spending, while a rise of $2.2 billion in auto loans alongside student loans had kept a lid on a steeper downfall.
Besides, the US Consumer Borrowing category covering auto and student loans, had registered its fourth straight month of gains in August following a $5.6 billion decline in April this year.
Nonetheless, despite a rise in pandemic cases alongside a higher unemployment rate that prompted consumers to cut back their spending, a number of Wall St. economists and analysts were quoted saying that they had been expecting a turnaround in credit card spending over the holiday season, however, the analysts had also warned that the gains would likely to be limited.
Meanwhile, projecting a further downward momentum in US Consumer Borrowing over the coming months, a senior economist at Oxford Economics, Oren Klachkin said following the release of US Fed data, “Softer consumer-spending growth, elevated savings and tight lending standards will limit the upside potential for credit card gains. ”