Consumer Credit Shrinks

Whatever happened to that recovery? The Federal Reserve announced Monday that consumer credit shrank by $3.28 billion in July, the first time it's gone down in 11 months. The decline indicates that Americans are buying less on credit cards and taking out fewer student loans. Consumer borrowing had been booming since the end of the recession, but the July number—which undershot economist estimates by more than $12 billion—marks a dramatic change. It’s very bad news for the economic recovery, since consumer purchases account for two-thirds of GDP. It also coincides with a slowdown in hiring. According to the Labor Department, the economy added only 96,000 jobs in August, as thousands dropped out of the workforce.