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U.S. credit card holders charged 0.4 percent less to their credit cards in June compared to July, the second consecutive month of decline, according to internal data reported by Barclays.
Barclays’ records indicate that credit-card use at gas stations spiked, while consumers cut back on buying cars, general merchandise, and spending on health care.
“Recent data suggest that the US consumer might be starting to pull back on spending,” Barclays’ analysts wrote in an 11 July research note, which has “led us to question if a sharper slowdown in consumer spending is around the corner.”
Bank of America said its cardholders added 0.3 percent to their balances last month, but added that skyrocketing gasoline prices pose “a risk that real consumer spending declined for the second consecutive month” in June, the bank’s analysts noted in an 11 July report.
Consumer spending accounts for as much as 70 percent of the U.S. economy.
TREND FORECAST: Although consumers saved at record rates during the COVID War, they also piled on debt, as we reported in “Consumer Debt Soars” (13 Jul 2021).
With a recession looming and prices still headed skyward, consumers will continue to be more cautious in borrowing and be more mindful of paring down the debt they already have.
Because shoppers fuel two-thirds or more of the U.S. economy, a reduction in consumer spending will help push the U.S. toward Dragflation, our Top 2022 Trend in which prices rise as the economy contracts.