Consumer borrowing slowed a bit in June from the torrid growth in the prior month, but continued at a solid pace, according to government data released Monday. Total consumer credit increased $12.4 billion in June to a record seasonally adjusted $3.86 trillion, posting an annual growth rate of 3.9%, according to the Federal Reserve. This is down from a revised $18.3 billion gain in May, which was the strongest rate in six months.
Consumer borrowing slowed a bit in the second quarter as a whole, continuing a trend in place since last fall. Credit rose at a 4.5% annual rate during the second quarter, down slightly from a 5% pace in the first quarter. The June increase in consumer borrowing was below economists’ estimates for a $16 billion gain, according to Econoday.
The historical main source of credit growth, nonrevolving credit, which covers loans for education and cars, rose at an annual rate of 4.9% in June, down from 8.2% in May. Student lending has been on a downward trend. Revolving credit, which is mostly made up of credit-card loans, increased at an annual rate of 3.9% in June, down from 5.7% in May.
Economists are watching consumer credit closely as they expect spending to drive growth in the remainder of 2017.