WASHINGTON (AP) — U.S. consumers cut back on their borrowing in August, with credit card use dropping for a sixth straight month, reflecting caution in the midst of the pandemic-triggered recession.
The Federal Reserve said Wednesday that total borrowing fell by $7.2 billion after a gain of $14.7 billion in July. It was the biggest decline since a $12 billion fall in May when pandemic-driven shutdowns ground the economy to a near standstill.
The weakness in August came from a $9.4 billion fall in the category that covers credit cards, the sixth decline in that area starting with a $25.4 billion drop in March.
The category that covers auto loans and student loans rose by $2.2 billion in August, its fourth gain after a $5.6 billion drop in April.
Consumer borrowing is closely followed for signals it can send about households' willingness to take on more debt to support their spending, which accounts for 70% of economic activity.
This story has been updated to correct the headline to read ‘consumer borrowing,’ rather than ‘consumer spending.’