U.S. consumer credit surged in July at the fastest pace since November 2001, spurred by increasing demand for student loans and auto financing.
Total consumer debt rose $26.01 billion to $3.24 trillion in July, reported the Federal Reserve on Monday. Figures for June were revised to take into account an increase of $18.81 billion from $17.26 billion. Economists in a Reuters survey had forecasted that consumer credit would jump to $17.35 billion in July.
“The only thing we have to worry about is there is excessive risk-taking in the auto sector,” Chris Low, a chief economist at FTN Financial, told Reuters. “But it’s still a good thing for the economy at least in the short term. Car sales are back to where they were before the financial crisis, which is remarkable.”
The last time consumer credit jumped was in November 2001, shortly after the 9/11 terror attacks, when loans grew $28 billion as large automakers offered zero-percent financing, among other incentives, in order to pull customers to the showrooms.
Revolving credit, which tracks credit-card debt, surged $5.34 billion to $880.5 billion, compared with a revised increase of $1.81 billion in June. Non-revolving credit, which tracks student loans advanced by the government as well as auto loans, rose $20.65 billion in July to total $2.36 trillion. This compares with a revised gain of $16.99 billion in June.
Meanwhile, U.K. retail sales rose in August, buoyed by rising demand for clothing and footwear, reported British Retail Consortium on Tuesday. Total retail spending jumped 2.7 percent from the previous year, compared with a gain of 1.3 percent in July. For the full report, please visit. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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