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The numbers: Consumer credit rose $17.8 billion in June, up from a $9.5 billion gain in the prior month, the Federal Reserve said Monday. That translates into a 4.3% annual rate. Credit growth rose at a revised 2.3% gain in June, higher than the initial estimate of a 1.3% gain.
Economists had been expecting a $11 billion gain, according to the Wall Street Journal forecast.
Key details: All of the gain came in nonrevolving credit, typically auto and student loans. This borrowing rose 6% in June, up sharply from a 0.3% growth rate in the prior month. This category of credit is usually much less volatile.
Revolving credit, such as credit cards, fell 0.6% in June after an 8.1% gain in the prior month. This is the first decline since April 2021.
Big picture: Total consumer borrowing is setting records monthly and is now just below $5 trillion
A vibrant labor market has supported consumer spending this year.
But economists are watching carefully. There is a sense that any excess savings from the pandemic is dwindling.
On top of this, banks reported to the Fed that they expect to tighten loan terms for the remainder of the year. They see sluggish demand for new loans.
The Fed’s data does not include mortgage loans, which is the largest category of household debt.
Market reaction: Stocks
DJIA
SPX
were higher on Monday. The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
rose to 4.08%.
