U.S. Consumer credit rises less than expected in August

Revolving credit outstanding had been edging higher in what had been a good indication for consumer spending but not in August, slipping $0.2 billion to end five straight months of gains. Non-revolving credit outstanding, boosted by strong vehicle sales and the government's continued acquisition of student loans from private lenders, rose yet again, up $13.7 billion for the 36th straight month of increase. But the gain for the non-revolving component is the smallest since January and, combined with the slippage in revolving credit, made for a lower-than-expected total increase of $13.5 billion. This compares with Econoday expectations for $20 billion and is the lowest total increase since November. The consumer sector, the largest sector of the economy, has not been a stand-out contributor which has held back the recovery in general, and part of this drag is a reluctance among consumers to borrow. Previous Report: Consumer credit outstanding jumped an outsized $26.0 billion in July on top of an upward revised $18.8 billion jump in June. But it is revolving credit, the component where credit cards are tracked, that especially stood out in the report, up $5.4 billion versus a $1.8 billion gain in June. This component has been stubbornly flat throughout the recovery and further gains in future reports would mark a long-awaited upturn in consumer spirits. The non-revolving component, as usual, was very strong, up $20.6 billion in July versus a $17.0 billion gain in June. But July's gain, unlike prior gains, was centered entirely in vehicle financing, not the government's acquisition of student loans from private lenders which contracted in the month.