US Consumer Borrowing Moderates on Drop in Revolving Credit

(Bloomberg) -- US consumer borrowing rose in August by less than forecast, restrained by the biggest decline in revolving credit in nearly two years.

Total credit outstanding rose $8.3 billion, the least in three months, after a revised $17.7 billion increase in July, Federal Reserve data showed Wednesday. The median estimate among economists surveyed by Bloomberg called for a $15 billion advance. The report doesn't include mortgages.

Credit-card and other revolving debt outstanding declined $4.8 billion, the most since November 2024. Non-revolving credit, such as loans for vehicle purchases and school tuition, increased $13.1 billion in August. Auto sales in August advanced to the fastest pace since April of last year, according to industry data.

Americans have continued to spend at a robust pace, fueling economic growth despite elevated prices. Still, wage growth has slowed and the personal saving rate stands at a four-year low.

Financing costs have also become more challenging. The yield on the 10-year Treasury note is hovering near the highest since 2002, reflecting concerns about inflation as well as forecasts for continued solid economic growth. The Fed raised its benchmark rate in September, and investors are pricing in one more rate hike before the end of the year.

The pressure is most acute for lower-income households and consumers carrying credit-card balances.

As of August, the average rate on credit-card accounts with assessed interest was 22.36%, the highest reported rate in a year, the Fed's consumer credit report showed. The rate on a 60-month loan from a commercial bank for a new vehicle purchase was 7.54%.

(Adds average rates on credit card, car loans.)