US consumer borrowing unexpectedly declined for the first time since 2024 on a drop in revolving credit.
Total credit outstanding decreased by about $182 million in May after sizable increases in the prior two months, Federal Reserve data showed Wednesday. The median estimate in a Bloomberg survey of economists called for a $17.5 billion advance.
The pullback was driven by a $5.3 billion decline in credit-card and other revolving debt outstanding, which also marked the biggest decline since 2024. Non-revolving credit, such as loans for vehicle purchases and school tuition, rose $5.1 billion in May. The report doesn’t include mortgages.
Household spending has remained resilient in recent months even as the oil shock from the Iran war pushed prices, particularly for gasoline, higher. The data suggests Americans are beginning to pay down some debt after the biggest back-to-back increase in consumer borrowing in more than three years.
For Americans carrying credit-card balances, high rates charged on those accounts can be a sizable financial burden. As of May, the average rate on credit-card accounts with assessed interest was an elevated 22.15%. And with investors betting the Fed may hike rates this year, borrowers are unlikely to get any relief on that front in the near term.
Fed deeply divided over inflation
The Federal Reserve’s rate-setting committee is split over whether inflation is likely to stay elevated or whether it will cool once the Iran war winds down, according to minutes released Wednesday.
In the first set of minutes released under new chair Kevin Warsh, “many” of the Fed’s 19 officials said its key rate would be unchanged from or slightly below its current level of 3.6% by the end of this year. But “many” also said that it would likely be higher by year-end.
Forecasts released after the meeting ended June 17 showed that half of the 18 policymakers who submitted projections supported lifting rates by the end of this year, while the other half supported keeping them unchanged or reducing them. Warsh did not submit a forecast, reflecting his view that doing so can lock policymakers into a specific approach that is harder to change if the economy shifts direction.
The minutes underscored the deep divisions among Fed officials, particularly over the future path of inflation. The policymakers generally expected inflation would decline as gas prices cooled and the effect of tariffs faded. Yet many officials also worried that massive investment in the artificial intelligence buildout would keep inflation elevated by lifting prices for semiconductors and other technology goods.
Airlines’ monthly fuel tab topped $6B
U.S. airlines spent $6.66 billion on jet fuel in May, the second straight month that fuel costs topped $6 billion, according to government data released Tuesday.
The May figure was 84% higher than a year earlier. Airlines spent $6.47 billion on fuel in April, the Bureau of Transportation Statistics said.
The higher year-over-year spending has been driven mostly by pricier jet fuel rather than a significant increase in how much of it airlines consumed. U.S. carriers used 1.627 billion gallons in May, down 0.6% from May 2025. Consumption was also slightly lower in April compared with a year earlier.
The average price airlines paid for fuel in May was $4.09 per gallon, down slightly from $4.11 in April but 85% higher than the $2.21 they paid in May 2025, the agency said.
Airlines worldwide have responded to the jump in fuel prices by raising fares and fees and trimming flight schedules. Fuel is typically one of the industry’s largest operating costs, leaving carriers particularly vulnerable to swings in energy prices.
US fuel exports straining domestic stockpiles
Unprecedented overseas demand for US diesel, propane and other fuels is straining commercial reserves from the Gulf Coast to the Eastern Seaboard as the US-Iran conflict reintensifies, pushing energy prices higher.
Propane exports led the record outflow reported by the Energy Information Administration on Wednesday, with diesel, gasoline and jet fuel cargoes also setting sail at a robust pace. The data encompassing shipments for the week ended July 3 was released shortly before Russia announced a ban on diesel exports to cope with domestic shortages.
Demand for US fuel probably won’t abate any time soon, given the absence of shipments from Russia, the world’s No. 2 diesel exporter.
US diesel exports were largely South America-bound, with Brazil the top recipient, according to analytics firm Kpler. But shipments to Europe, where prices also have soared, accounted for about 14% of the total.
On the home front, stockpiles of diesel and other fuels have dwindled to the lowest seasonal levels in years, a situation that may test the nation’s capacity to continue playing the role of supplier of last resort.
Compiled from Bloomberg and Associated Press reports.