Americans have started cutting back on their credit card as shown by the card balances during the month of June. There has been quite some trimming in the overall consumer debt for the 19th time in a period of 21 months. This drop though was far below expectations, which suggests that economists have become overly pessimistic about the finances of the consumers or the other reason could be that the households in the country have taken a breather from observing frugality.
The total outstanding credit balance for consumers during the month of June was 1.3 billion dollars from May. It reached 2.42 trillion dollars which is a seasonally adjusted mark according to the Federal Reserve. The expectations of economists who were surveyed by the Bloomberg News had expected a drop of 5.3 billion dollars. The Federal Reserve had also revised the decline in May in consumer credit to 5.3 billion dollars compared to the earlier estimations of 9.1 billion dollars.
This total is a measurement of all the consumer loans that are outstanding excluding the mortgages and real estate secured debt. The debt of credit card slid to 4.5 billion to a seasonally adjusted mark of 826.5 billion dollars in the month of June. The card debt has dropped by a remarkable 13.8 percent since 2008 end at which point it had stood at 958.1 billion dollars. Quite a few customers have whittled away at high cost balances in credit card after the recession had hit in 2008. Some of the consumers didn`t really have a chance as banks had canceled some of the cards and had sharply pared the credit limits.
However, there has been different news for a different segment. Loans for cars, educations and other purposes have increased by 3.2 billion dollars in June to touch the mark of 1.592 trillion dollars. This category of the credit is down by less than 1% since the end of 2008. The 19.6 billion dollar decline in the debt of the consumers during the second quarter has accelerated from 10.7 billion dollars pay down witnessed in the first quarter of the year. This data has been consistent with other reports which have pointed to a slowdown in the spending of the consumer during spring.
The personal consumption rose at a rate of 1.6% annually in the second quarter which has come down from 1.9% rise in the first quarter according to government data.