WASHINGTON - American consumers increased their borrowing at a slower pace in June, as the category that includes auto and student loans posted the smallest gain in a year. Still, the June increase brought overall consumer credit -- not including mortgages or other debt secured by real estate, including home-equity loans -- to a fresh record of $3.86 trillion.
In addition, the total for the category of "revolving debt," primarily credit card balances also hit a new record high of $1.027 trillion.
The Federal Reserve said Monday that overall consumer credit expanded by $12.4 billion in June, down from May's $18.3 billion increase and less than economists had been expecting.
The credit report is closely watched for clues about the direction of consumer spending, which accounts for about 70 percent of economic activity.
Nonrevolving credit, which includes auto and student loans, rose $8.3 billion, down from an $11.4 billion jump in May and the smallest amount since a $7 billion increase in June 2016.
Revolving debt, the category that includes credit cards, climbed $4.1 billion, down from May's $6.9 billion gain. This category of debt had crossed the $1 trillion threshold in fourth-quarter 2016, not having seen that level since the Great Recession.
U.S. economic growth rose at a solid 2.6 percent annual pace from April through June on a healthy increase in consumer spending. The job market also looks good. Employers last month added 209,000 jobs, and the unemployment rate fell to a 16-year low 4.3 percent.
But the Commerce Department reported last week that consumer spending slowed in June as incomes grew at the weakest pace in seven months.
"America's credit card balances have never been higher, but there's no reason to think they won't just keep climbing," said Matt Schulz, CreditCards.com's senior industry analyst. "Combine that with steadily rising interest rates and you have a potentially volatile mix."
Focusing on the inherent threat that ever-climbing card balances represent, Schultz added, "This record should serve as a wake-up call to Americans to focus on their credit card debt. Even if you feel your debt is manageable right now, know that you could be one unexpected emergency away from real trouble. Get that debt paid down while things are good so you can be better prepared if things turn for the worse."