Last week, the Discover U.S. Spending Monitor revealed that consumer sentiment is brightening, yet most people are putting larger buying plans on hold while they focus on covering day-to-day necessities.
Now, the latest figures from the Federal Reserve back up that trend. According to the Fed’s monthly report, revolving credit – a category made up nearly entirely of credit card debt – decreased by 11 percent in April.
The fall in credit card spending comes after a similar 11.2 percent drop in March, a trend that analysts say is largely a response to fears about job losses. A separate report from the Department of Labor indicated the unemployment rate is now at 9.4 percent.
Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York, told Bloomberg that rising standards for credit scores may also play a role in the slowdown in consumer credit spending.
“Those customers who do want to spend are having their credit limits cut left and right by banks that are increasing their credit-risk checks,” he said.
Meanwhile, the credit category comprised of auto loans and other non-revolving debt also decreased in April at an annual rate of 5.3 percent, according to the Fed’s data.
Balancing out the drops in spending was an uptick in the U.S. consumer savings rate, which increased to 5.7 percent during the month.
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