U.S. consumers in May racked up debt at their slowest pace since the end of last year, the Federal Reserve said Monday.
The Fed said consumer credit outstanding rose by $6.5 billion to a seasonally adjusted $1.59 trillion in May. That was the smallest monthly dollar gain since December of last year. The annual rate of growth in May, 4.9%, was the smallest since October 1999.
The figures raise the prospect that consumer spending, which has been a mainstay in an otherwise slowing U.S. economy, could ease. If consumers retrench to polish their household balance sheets, they could become a drag on the economy as they cut back on purchases.
The Fed also said the large gain in April consumer credit outstanding was revised downward slightly, to a $13.7-billion increase from the initially reported $13.9-billion gain.
"I'd characterize this period as one where consumers felt somewhat cautious but were still willing to spend," said Dan Seto, senior economist with Sumitomo Life Investment in New York.
The May gain was smaller than Wall Street analysts had been anticipating. Economists surveyed by Reuters had expected credit to increase by a larger $9.9 billion.
In the May report, both revolving and nonrevolving debt growth slowed.
Revolving credit, which includes credit and charge card debt, rose by $3.2 billion, well off from the $9.1-billion gain seen in April.
Nonrevolving debt, which includes closed-end loans for autos and vacations, as well as educational and other expenses, increased by $3.3 billion, down from a $4.5-billion gain in April.