The latest consumer credit report issued by the Federal Reserve shows Americans were paying down their debt at record levels in August. For the first time in almost 11 years, the data suggest Americans paid off more debt than they spent in the month, which may be in part due to the fiscal stimulus package.
U.S. consumer credit outstanding decreased by an annual 3.7% in August, following a 2.4% gain in the revised data for July. Total consumer credit in August fell by a seasonally adjusted $7.9 billion in August to a total of 2.5773 trillion, according to data released Tuesday from the U.S. Federal Reserve.
The change was in major contrast to expectations for a $5 billion increase in total credit outstanding.
Credit card and other revolving debt fell by 0.8%, or $0.6 billion in the month, while non-revolving borrowing fell by 5.4%, or $993 billion.
The extra savings do not help consumer sales, however. August was a weak month in personal consumption, and many economists expect the third quarter to show real consumption heading negative for the first time in 17 years.
By Patrick McGee and edited by Sarah Sussman
©CEP News Ltd. 2008