Another signal of dragging economy: Consumer credit sags in August

In another sign of an economy slowing down, the Federal Reserve Wednesday said consumer credit decreased at a seasonally adjusted annual rate of 2% in August after seeing growth in the two previous months.

According to the Fed’s monthly “Consumer Credit Outstanding” report, the 2.1% decline in August followed expansions of 4.9% and 4.3% in June and July, respectively. All growth rates are seasonally adjusted annual rates.

Additionally, the report noted that revolving credit (typically, that extended through credit cards) fell at an annual rate of 11.25%. Non-revolving credit (including car loans, education and vacations) increased at a rate of 0.75%, the Fed said.

Among financial institutions, banks saw a very slight decrease in outstanding consumer credit (down by about $400 billion in August from the previous month to $1,650.4 billion). Finance companies increased their holdings by $3 billion in the month, and credit unions by $1.5 billion, the Fed report noted.

Federal Reserve August ‘20 Consumer Credit report (G.19)