WASHINGTON (10/10/13)--With consumers' credit card balances declining in August for the third consecutive month, some economists say that could be a signal that consumers are downshifting their spending. And a gridlock in Washington could have a further impact, according to Credit Union National Association Chief Economist Bill Hampel in The Wall Street Journal Online.
The uncertainty caused by the Washington gridlock on the federal deficit could cause overall credit growth to ease, especially if a prolonged debt ceiling fight makes consumers skittish about financing cars, appliances and other long-lasting goods, Hampel told WSJ Online Monday.
"Consumers have the ability and need to replace big-ticket items, but it's also really easy to postpone those purchases for a couple of months if they get nervous," he said.
The partial government shutdown, which began Oct. 1 and has affected roughly 800,000 employees, threatens to curtail spending in the public sector for the rest of 2013, said the Journal.
Although consumer debt rose overall, consumers' revolving credit--the money they owe on credit cards--declined 1.25% or $883.4 million during August. Consumer spending accounts for a significant part of the economy, and the data suggest that spending has not helped the economy pick up its recovery pace, the article said.
See related News Now article, "Consumer Credit Increases 5.5% In August, CUs See Rise," by using the link.