WASHINGTON — Borrowing by U.S. consumers grew at a faster-than-expected pace in July as auto and other personal loans surged, offsetting a drop in credit card debt, Federal Reserve System figures showed Tuesday.
Borrowing rose by $5.3 billion for the month to $1.27 trillion, after rising a revised $8.8 billion during June. Previously, the Fed said June borrowing increased $6.7 billion. Analysts had expected an increase of $3 billion for July.
Economists watch the Fed's consumer credit statistics because it helps them gauge changes in consumer spending, which accounts for two-thirds of the overall economic activity.
Revolving loans, which include credit card borrowing, fell $2.1 billion in July, after rising $4.2 billion in June.
Auto loans rose $3.5 billion, after increasing $2.9 billion. Other types of installment loans increased $4 billion, after rising $1.6 billion.
The pace of consumer credit was rising at a 5% annual rate during July, the Fed said. That's down from the 8.4% pace of borrowing in June.
Growth in consumer credit is slower than just a couple of years ago for a variety of reasons, analysts said. An abundance of jobs, rising incomes and low interest rates have allowed many consumers to pay cash for purchases and to refinance and consolidate existing debt.
Banks, thrifts, retail chains and other lenders have been less aggressive in extending credit to consumers after a surge in credit card delinquencies and bankruptcies.
The number of businesses and individuals filing for bankruptcy in U.S. federal courts hit a record level during the last 12 months, according to a report released last month from the Administrative Office of the U.S. Courts.
Since June 30, 1997, 1.43 million individuals and businesses filed for bankruptcy, compared with 1.32 million during the same period the year before, an increase of 8.5%, according to the court. Personal filings rose the most, jumping 9.2% to 1.38 million from 1.26 million. Business filings dropped 7% to about 50,000, from about 54,000.