Ahead of the Bell: US consumer credit
WASHINGTON (AP) — U.S. consumers likely picked up their pace of borrowing in August, reflecting a solid increase in car sales during the month.
Economists were looking for consumer borrowing to rise by $7 billion in August, according to a survey by FactSet. The Federal Reserve will release the report at 3 p.m. EDT Friday.
In July, consumers trimmed their borrowing by $3.3 billion compared with June.
A drop in credit card debt in July offset a small rise in the category that covers auto and student loans.
Retail sales rose in August, in part because consumers bought more cars and trucks. However, they were cautious elsewhere, as rising gas prices left them less to spend in other areas.
Activity through July, left total consumer debt at $2.708 trillion, putting it well above pre-recession levels.
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, that figure was 17 percent lower.
During the same period, 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 a level 18.6 percent higher than July 2008.
In the April-June quarter, student loans totaled $914 billion, according to a recent report from the Federal Reserve Bank of New York. That is a nearly 50 percent increase from the July-September quarter of 2008.
Much of the increase in student loans is because of high unemployment, which has led many Americans to go back to school in hopes of improving their education and skills in a more competitive labor market.
American finances have been improving. In a separate quarterly report, the Fed said last month that a jump in the stock market and rising home prices are bringing Americans closer to regaining the wealthy they lose in the recession.
In the severe 2007-2009 recession, Americans lost nearly a quarter of their wealth, from a pre-recession peak of $67.4 trillion in the fall of 2007, household wealth plummeted to $51.2 trillion in early 2009. But as of the April-June quarter, household net worth stood at $62.7 trillion. The net worth figure is the difference between assets and liabilities such as mortgages and other loans.
While the Fed's quarterly report covers all household debt, the Fed's monthly consumer credit report covers only loans not backed by real estate, excluding mortgages and home equity loans.