A painfully slow economic recovery and elevated unemployment, combined with an abrupt end to government aid and no new stimulus in sight has Americans cutwith the end of government’s aid, has caused Americans to significantly cut back on their borrowing.
According to the newest Federal Reserve figures, consumer borrowing unexpectedly fell in August as credit card balances declined for a sixth consecutive month.
Total credit card debt decreased by $7.2 billion in the month of August after an upwardly revised $14.7 billion gain in July. It also represents the first decline since a $12-billion plunge in May.
Compared with July, revolving debt fell by $9.4 billion in the category that covers credit cards, the sixth decline in that area starting with a $25.4-billion drop in March.
But auto and student loans have defied that gravity, with the combined category rising by $2.2 billion in August, its fourth gain after its first decline in April.
The $2.2 trillion distributed by the government under the CARES Act passed in March is already spent. A $600-a-week federal benefit expired more than two months ago and the sequel of government aid any time soon is now unlikely.
According to new research by a team of economists from four American and European universities, the majority of the money from the first stimulus was spent on rent and bill payments, with extra for food and personal care.
Earlier this week, President Donald Trump called off negotiations on another coronavirus relief package and rescheduled them for after the November election. CLICK for complete article