🔥US consumer credit continues to fall: Have Americans run out of confidence to swipe their cards?

The Fed’s G.19 report for May has raised concerns in the market:
- Total consumer credit fell $182M times, the first decline since November 2024, while the market expected an increase of $17.5B
- Revolving credit (mainly credit cards) dropped sharply by $5.3B, fully reversing after 2 months of consecutive gains above $10B months
- Non-revolving credit (auto loans + student loans) only rose by $5.1B, the weakest since the beginning of the year
- The average credit card interest rate climbed to 22.15%. The Fed has cut rates, but credit card rates have not followed suit
- The average auto-loan amount reached a record $42.5K in Q1/2026
In spring 2026, Americans are expected to receive unusually large tax refunds thanks to new tax legislation, estimated to add up to $100B. Tax refund money is being used to pay down credit card debt instead of changing consumer behavior. Retail sales data for June next week will confirm whether spending falls sharply while credit card debt declines; if so, the Fed will have to abandon the scenario of rate hikes by year-end.