Americans’ use of credit cards in the 12 months through August saw its steepest contraction since the pandemic recession, suggesting that the U.S. consumer sector may be shifting from credit-driven resilience toward a more cautious footing.
According to the Federal Reserve’s G.19 Consumer Credit report for August, total consumer credit grew at a negligible 0.1 percent annual rate, a sharp deceleration from 4.3 percent in July. Revolving credit—primarily credit cards—fell at a 5.5 percent annualized rate, while nonrevolving credit, such as auto and student loans, rose 2 percent, partly offsetting the decline.
The August pullback, the third monthly drop in revolving balances so far this year, left credit-card debt 2.5 percent lower than a year earlier—the largest 12-month decrease since the pandemic. By comparison, revolving credit plunged 10.3 percent between March 2020 and March 2021 as lockdowns, reduced spending opportunities, and federal stimulus payments prompted households to pay down debt and rebuild savings….