- Chris Low, chief economist at FTN Financial
U.S. consumer credit soared in July, recording the biggest gain since November 2001, boosted by demand for auto loans as well as student borrowings. Total consumer credit rose $26.01 billion to $3.24 trillion in July, according to the Federal Reserve. Moreover, June's consumer credit figure was revised upwards to show an $18.81 billion advance from $17.26 billion. Revolving credit, which measures credit-card use, rose $5.34 billion to $880.5 billion, after an upwardly revised $1.81 billion increase in June. Credit card use has increased five consecutive months, the longest such stretch since the period ended April 2008. Non-revolving credit, which includes borrowing for autos and college tuition, jumped $20.65 billion in July to $2.36 trillion following an upwardly revised $16.99 billion surge in June. The gain in credit is likely to be extended into August as demand for cars rose. Motor vehicle sales surged last month to an annual 17.5 million, the strongest since the beginning of 2006, according to Ward's Automotive Group.
Meanwhile, Treasury Secretary Jack Lew called on Monday for prompt action to stem the surge of U.S. companies moving their headquarters abroad to avoid corporate U.S. income taxes, as it could impair efforts to control the U.S. federal budget deficit. He reiterated that he is looking into reconsidering regulations to make fleeing the country less attractive.
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