(Bloomberg) -- US consumer borrowing increased in June by less than forecast, reflecting smaller credit-card balances.
Total credit outstanding rose $8.9 billion after an upwardly revised $13.9 billion advance in May, according to Federal Reserve data released Wednesday. The median forecast in a Bloomberg survey of economists called for a $10 billion increase. The figures aren’t adjusted for inflation.
Revolving credit, which includes credit cards, declined by nearly $1.7 billion, the most since early 2021. Non-revolving credit, such as loans for vehicle purchases and school tuition, rose $10.6 billion, the most in a year.
Despite the decline in revolving credit, Americans have been increasingly relying on credit cards and other forms of financing to support spending as wage growth slows, pandemic savings fade and higher prices continue to bite. With interest rates still at a two-decade high, economists worry that consumers tapping credit — especially lower-income ones — may not be able to sustain spending for much longer.
A recent Philadelphia Fed report showed the share of credit-card balances past due reached a record high at the start of the year in data back to 2012. Separate data from credit-score provider VantageScore found that delinquency rates for auto loans and credit cards were above pre-pandemic levels in June.
Consumer spending is the biggest driver of US economic growth, so Fed officials will consider the health of household finances as they decide whether to start lowering borrowing costs at their next policy meeting in September. After worse-than-expected labor data last week triggered a market selloff, traders and many economists now anticipate central bankers to lower rates by half a percentage point next month — as opposed to their typical quarter-point moves.
--With assistance from Chris Middleton.
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