U.S. Consumers Shun Credit Cards In May, And Borrowing Cools

Key details: Revolving credit, such as credit cards, fell at a 3.2% rate in May after a 6.9% gain in the prior month. It is the first drop since November.

Nonrevolving credit, typically vehicle and student loans, rose 2.8%, following a 3% rise in the previous month. This category of credit is typically much less volatile.

The Fed data does not include mortgage loans, which is the largest category of household debt.

Big picture: The small increase in credit usage fits with a picture of weaker consumer spending this year. Retail sales fell 0.9% in May, the biggest drop in two years.

Car sales spiked earlier this year as consumers sought to avoid higher prices from planned tariffs. But sales have slowed sharply since April.

A gradually slowing labor market, concerns about high prices and elevated borrowing rates have made consumers less eager to spend, economists at Nationwide said in a note to clients.

Market reaction: Stocks were lower on Tuesday as the White House pressed ahead with plans for higher tariffs on the largest U.S. trading partners. The yield on the 10-year Treasury note rose to 4.418%.