Sharp Drop-off in Auto Sales as Credit Card Spending Keeps Pace in July

Consumer credit expansion slowed sharply in July, paced almost entirely by credit card debt growth as auto sales nearly ground to a halt, the Federal Reserve said late Monday.

Overall consumer credit outstanding grew $4.6 billion in July – or at an annual rate of 2.1 percent — the smallest gain so far in 2008 and well below analysts’ forecasts. Nearly all of the growth was in the revolving debt category, primarily comprised of credit cards.

Consumers in the U.S. added $3.9 billion to credit card balances in July, an annual growth rate of 4.8 percent. The gains outpaced the rise in June which was revised by the Fed to 3.5 percent. In the second quarter of 2008, credit card debt grew at an annual rate of 3.5 percent.

The Fed’s monthly consumer credit report, commonly called G.19, does not include debt backed by real estate.

Non-revolving credit, like that found in auto, student, and personal loans, grew by $678 million in July, or at an annual rate of 0.5 percent. According to Bloomberg, July’s auto sales were at their lowest level in 15 years.

Total consumer debt outstanding in the U.S. stood at $2.587 trillion at the end of July.