In August, the growth of consumer credit in the United States slowed compared to the previous month, largely due to the largest drop in credit card balances since March 2021. Data released by the Federal Reserve indicated that total consumer credit increased by $8.9 billion, following an upward revision of July's figures to $26.6 billion, marking the most significant rise since October 2022. Economists surveyed by Bloomberg had estimated a median increase of $12 billion. It's important to note that these figures are unadjusted for inflation.
Revolving credit, which includes credit cards, saw a reduction of nearly $1.4 billion. In contrast, non-revolving credit, which covers loans for vehicles and education, increased by $10.3 billion. The decline in revolving credit suggests that consumers are focusing on reducing credit card balances that carry higher interest rates compared to previous years. Although the Federal Reserve initiated a cycle of easing in September by reducing the benchmark interest rate by 50 basis points, the effects on consumer borrowing costs have yet to be fully realized.
