A Bloomberg survey had expected total consumer debt to fall by $3.5 billion in July, after a revised $1.0 billion decline in June.
In the past 12 months, total consumer debt has fallen 3.1% to $2.418 trillion from $2.497 trillion in July 2009. That's somewhat less than the 3.3% year-over-year rate of decline recorded in June.
Once again in July, all of the nation's consumer debt reduction occurred in revolving debt, which includes most credit credits. Revolving debt fell by $4.4 billion to $827.8 billion. Non-revolving debt, which includes most auto loans, personal loans, and student loans, increased by $700 million to $1.591 trillion.
Belt-Tightening Weighs On U.S. GDP Growth
July's consumer credit report provided 'more of the same' regarding credit card (revolving) and non-revolving debt. Americans are not only paying-down revolving debt, they are weeding-out frivolous consumption.
If the above pattern persists, consumer spending could comprise a lower percentage of U.S. GDP and if commercial spending (such as business investments and exports) fails to fill the gap, U.S. GDP will suffer.