Americans cut back on credit card use in June, a sign that high unemploymentand slow growth have made some more cautious about spending.
Still, total consumer borrowing increased as many kept taking out loans to buycars and attend school.
Consumer borrowing rose 3 percent in June from May to total $2.58 trillion, theFederal Reserve said Tuesday. That's just below the all-time high reached inJuly 2008.
Auto and student loans rose 7 percent to $1.71 trillion in June.
Credit card debt fell 5 percent to $865 billion. That's only 1.6 percent abovethe post-recession low reached in April 2011.
Americans have been relying less on credit cards since the 2008 financialcrisis and Great Recession.
At the same time, student loan debt has steadily increased. It has risen 54percent since mid-2008 to total $902 billion as of March this year, accordingto the Federal Reserve Bank of New York.
Student loans now accounts for roughly 35 percent of all consumer debt, up fromless than a quarter four years ago. That makes it the biggest source ofconsumer debt outside of mortgages.
The increase partly reflects high unemployment, which has led many Americans toseek better education and skills in a more competitive labor market.
"We are probably witnessing a shift in consumers' attitudes towardsdebt," said Paul Edelstein, an economist at IHS Global Insight."Households may be willing to take on debt to pay for cars andeducation... . But other forms of consumption will come increasingly fromcurrent incomes."
Overall, Americans have been steadily paring debt since the financial crisis.Household debt, including mortgages and home equity lines of credit, hasdeclined for 16 straight quarters to $12.9 trillion in March, according to theFed. That's down from $13.8 trillion in March 2008.
Some of that debt has been removed by defaults, such as foreclosures.
A Commerce Department report last week showed that consumers are more frugal.They spent no more in June than they did in May, while their incomes rose atthe fastest pace in three months.
The flat pace of spending was likely because hiring has been weak andconfidence low. Employers added 163,000 jobs in July, the most in five months.But hiring for most of this year hasn't been enough to lower the unemploymentrate. The rate ticked up to 8.3 percent in July from 8.2 percent in June.
Consumer confidence increased in July for the first time in five months, theConference Board said. But it remains well below healthy levels.
The economy is growing too slowly to boost confidence or hiring. It expanded ata 1.5 percent annual pace in the April-June quarter, down from 1.9 percent inthe first quarter and 4.1 percent in the final three months of 2011.
Unless job growth picks up, consumer spending could weaken more and drag downeconomic growth further.
The Federal Reserve's borrowing report covers auto loans, student loans andcredit cards. It excludes mortgages, home equity loans and other loans tied toreal estate.