Consumers’ total outstanding credit grew by $8.9 billion in June, driven by gains in non-revolving credit and a dip in revolving credit, the Federal Reserve announced Wednesday.
Non-revolving credit, which includes student and auto loans, surged by $10.6 billion, while revolving credit, such as credit card debt, fell by $1.7 billion.
This shift nudged total outstanding credit to $5.08 trillion.
Overall, consumer credit increased at an annual rate of 2.1%, with non-revolving credit climbing 3.4% and revolving credit dropping 1.5%.
The $8.9 billion uptick fell short of economists’ predictions, with Bloomberg noting a median forecast of $10 billion.
Interestingly, the revolving credit drop was the largest since early 2021, while the non-revolving credit increase was the highest in a year.
VantageScore, a national credit-scoring company, reported record-high originations across all generations and credit tiers for the year so far, particularly in personal loans.
These loans have become a lifeline for consumers stretching their financial resources.
“It is clear that lenders are extending new credit, but consumers are showing signs of increased stress,” VantageScore observed.
Business analysts are closely watching these trends as they may impact future lending practices and economic stability.
The Fed’s consumer credit report follows its recent household debt report, which showed a 0.6% rise in overall indebtedness in the second quarter, reaching $17.8 trillion.
Some indicators point to financial strain: 9.1% of credit card balances and 8% of auto loan balances have become delinquent over the past year.
The Fed highlighted that credit card delinquency rates remain elevated, signaling potential concerns ahead.
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