October 05, 2012

U.S. consumer credit rebounded strongly in August after posting its first decline in nearly a year in July, Federal Reserve data showed on Friday.

The rebound would likely be interpreted as a short-term boon to growth, though it could bode ill for household balance sheets if it is not accompanied by a rise in real wages, which have been stagnant.

U.S. consumer credit rose $18.12 billion, the biggest gain since May, following July's revised $2.45 billion decline. Revolving credit, which mostly measures credit-card use, climbed $4.2 billion. Nonrevolving credit, which includes student and auto loans, rose $13.92 billion.

Credit has been expanding almost continuously since mid-2010 as the country recovered from the 2007-2009 recession. The decline in July was the first drop since August of last year.

A sharp drop in the U.S. jobless rate to 7.8 percent in September, reported on Friday by the Labor Department, suggested the economic recovery, while weak, continues to muddle along.

(Reporting By Pedro Nicolaci da Costa; Editing by Neil Stempleman)

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