By Christopher S. Rugaber Associated Press
WASHINGTON — Americans cut back on their credit card use in July for the second straight month, suggesting many remain cautious in the face of high unemployment and slow growth.
Total consumer borrowing dipped $3.3 billion in July from June to a seasonally adjusted $2.705 trillion, the Federal Reserve said Monday. The drop in credit card debt offset a small rise in a measure of auto and student loans.
The Fed also said Americans have borrowed much more than previously estimated after it revised consumer borrowing data back to December 2010. June’s figure was increased to $2.708 trillion, or $130 billion higher than initially thought. It’s also well above pre-recession levels.
Consumer debt declined even though Americans boosted their spending in July by the most in five months, according to government data released last week.
Still, the job market has weakened substantially from the start of the year, which is keeping downward pressure on spending. In August, employers added just 96,000 jobs, down from 141,000 in July and well below the average 226,000 jobs a month in the January-March quarter.
Consumers have been using credit cards much less since the 2008 credit crisis. Four years ago, Americans had $1.03 trillion in credit card debt, an all-time high. In July, it was $850.7 billion — or 17 percent lower.
During that same time, student loan debt has increased dramatically. The category that includes auto and student loans, along with other loans for items such as boats, has jumped to $1.85 trillion from $1.56 trillion in July 2008.
Much of that increase in student loans is a result of high unemployment, which has led many Americans to seek better education and skills in a more competitive labor market.
The weak job market is putting more pressure on the Federal Reserve to provide more help to the anemic economy. Fed officials will meet Wednesday and Thursday. Economists expect the central bank to announce another round of bond buying to put downward pressure on long-term interest rates.
The economy is growing too slowly to boost business and consumer confidence and spur sustained gains in spending and hiring. Overall economic growth slowed to an annual rate of just 1.7 percent in the April-June quarter and analysts don’t expect much of a pick-up for the rest of the year.
Overall, Americans have been steadily paring debt since the financial crisis. Household debt, including mortgages and home equity lines of credit, has declined for 16 straight quarters to $12.9 trillion in March, according to a separate Fed survey on consumer finances. That’s down from $13.8 trillion in March 2008.
Some of that debt has been removed by defaults, such as foreclosures. But Americans are also repairing their finances by paying down debts.
The Fed’s monthly consumer credit report covers auto loans, student loans and credit cards. Unlike the quarterly Fed report, it excludes mortgages, home equity loans and other loans tied to real estate.