June sees tepid growth in consumer credit
Aug 11, 2013 Walt Wojciechowski
Despite a marked increase in auto lending and education financing, overall consumer credit rose less than expected in June, according to research by the Federal Reserve.
The slower than expected increase can be partly attributed to a decrease in credit card use. In total, consumer installment credit rose by $13.8 billion in June to total $2.85 trillion, Reuters reported. Following a survey of economists conducted by Reuters, credit was forecast to jump by $15 billion.
"I think this report speaks to a well-functioning credit marketplace," Ezra Becker, vice president of research and consulting at TransUnion, told Reuters. "Lenders are offering more credit, and consumers are using it without an over-reliance on credit."
Loans for cars and college tuition, also known as non-revolving credit, continued to reflect high demand. However, the news source noted that analysts are concerned that rapidly rising interest rates could damage the economy's steady recovery.
A separate forecast from Bloomberg surveyed 32 economists who predicted increases in consumer credit anywhere between $10 billion to $21 billion. The news source attributed the slow down in consumer credit growth to a higher payroll tax, which reduces how much money Americans take home at the end of the day.