A slightly volatile labor market discouraging the trend of borrowing was at evidence as consumer credit declined for 5th straight month. According to the Federal Reserve the credit fell further by 1.3 billion dollars at the back of the 5.3 billion dollars revised drop in the previous month.
According to a Bloomberg news survey`s median forecast, the measure of non revolving loans and credit card debt was projected by Economists to be 5.3 billion for the month of June. As Americans are trying to rebuild their savings, there would be some restraint in the spending even as credit card debt in June has dropped to its lowest levels since October 2005.
According to Joshua Shapiro, who is MFR Inc.`s chief US economist in New York, there is some tough sledding ahead for the consumers. According to him there isn`t much job growth without which it would be very difficult to generate an income growth to increase the consumer spending as well. According to projections from the Bloomberg`s survey of 36 economists in June, the decline in consumer credit has varied between 2 billion dollars to 11 billion dollars on the back of 9.1 billion dollar consumer credit decrease earlier.
Many stocks suffered from losses after the Standard and Poor`s 500 Index dropped 0.6 percent to touch 1118.7 in New York. There was rise in the 10 year Treasury bill leading to a decline in the yield from 2.9 percent to 2.82 percent. July witnessed a private employment gain of 71,000 following up on the 31,000 gain in the month of June. These numbers according to the Labor Department Figures were smaller than the expectations. Economists had estimated a 90,000 gain but the number seemed to have fallen way below that. As the population count had wound down, there has been a drop in the number of federal census workers and the number touched 131,000 including decline in payrolls from government jobs.
As the magnitude of the labor force diminished the unemployment rate was held at around 9.5% during the month of July. Fed report has also thrown some light on revolving debt including credit cards that has declined by 4.5 billion dollars in the month of June. The current mark has touched 826.5 billion dollars, the lowest level since 2005. Meanwhile the non revolving debt including mobile homes and cars rose by 3.1 billion dollars for the current month.