Total U.S. consumer credit fell by a steeper-than-expected $10.3 billion in June, Federal Reserve data showed on Friday, and the drop in May was much bigger than previously thought.
June consumer credit outstanding fell at a 4.9 percent annual rate to $2.503 trillion from $2.513 trillion in May.
Analysts polled by Reuters had forecast consumer credit dropping by $4.7 billion in June. May's figures were revised to show a $5.4 billion drop from the previously reported $3.2 billion fall.
Consumer credit has now declined for five consecutive months as companies reduce lending limits to contain losses, and households continue to deleverage.
The current ratio of consumer credit to disposable personal income is hovering near all-time highs. This suggests that future consumer credit could be throttled by the slowdown in disposable income and the weak labor market, wrote economists at Action Economics in a research note.
Nonrevolving credit, which includes closed-end loans for big-ticket items like cars, boats, college education and holidays, fell $5.04 billion, or at a 3.8 percent annual rate, to $1.59 trillion.
Revolving credit, made up of credit and charge cards, dropped $5.25 billion, or at 6.8 percent rate, to $917 billion.