Consumer Debt Rises 9.9%

American consumers' debt burdens grew sharply in June, as heavy growth in personal and automobile loans more than offset a slowdown in credit-card borrowing.

Consumer credit, a measure of consumer borrowing not related to real estate, grew 9.9%, or $12 billion, in June to $1.464 trillion, the Federal Reserve reported Monday. That was slower than the revised 10.3%, or $14.1 billion, increase in May. But growth in debt remained near historically high levels as most Americans, gainfully employed and confident in the economy, continued to finance their purchases.

June's jump in consumer credit was helped by a surge in non-revolving credit, which includes debt for a one-time use such as a car loan, student loan or personal loan. Non-revolving credit grew by $8.3 billion in June to $832.3 billion after rising $7.8 billion in May.

Revolving credit, which includes reusable lines such as credit cards, grew $3.7 billion in June to $632.5 billion, slower than the $6.3 billion growth in May.

The overall credit growth came in a month that saw a sharp 10% surge in orders for durable goods, big-ticket items such as autos and appliances that are meant to last three or more years. Because of their high price tags, durable goods are often financed by consumers, accounting for the jump in non-revolving credit.

The slower, yet strong growth in revolving credit came as retail sales continued to rise, but at a more moderate pace than earlier in the year.

Although the report is seen as a measure of the economy's overall level of consumer demand, it does not include mortgages or home equity loans, which many Americans use to finance purchases. But the high rate of consumer borrowing is a sign that American consumers, who are responsible for about two-thirds of the nation's economic growth, are continuing to borrow and spend, even following six interest rate increases by the Federal Reserve in the past year.

Higher interest rates are intended to slow consumer and business demand and reduce the risk of inflation by making it more costly to borrow and spend. At its most recent meeting in June, the Fed refrained from raising interest rates, citing slower activity in several areas of the economy. The Fed's policymakers meet next on Aug. 22.