WASHINGTON -- U.S. consumer borrowing grew at the slowest pace in
more than three years in August as demand for credit card and auto
loans stalled, Federal Reserve figures showed Monday.
Americans' consumer credit rose $3.3 billion in August to $1.167
trillion, down from July's revised increase of $7.3 billion.
Previously, the Fed said July borrowing rose $7.7 billion. Analysts
had expected an August increase of $7.0 billion.
After a three-year borrowing binge that nearly doubled the
borrowing total, the August slowdown suggests "consumers' debt
is much too high and people can't keep up that pace of borrowing,"
said Kevin Flanagan, an economist at Dean Witter Reynolds in New
York. "Consumer spending could slow accordingly."
The borrowing slowdown may be linked to a new cautious attitude by
lenders in response to an increase in bankruptcy filings by
and a surge in credit-card delinquencies.
"Banks have begun to tighten consumer credit standards," said
NationsBank Corp. economist Peter Kretzmer in a research report.
For retailers, the report may be a warning that consumer demand
will prove to be disappointing for the second year in a row during
the Christmas shopping season, analysts said.
At the same time, while the report is the latest indicator to
suggest the economy is losing steam, some analysts caution against
reading too much into one month's report. "Consumers are still
sufficiently confident to continue purchasing on credit," said Lynn
Reaser, chief economist at Barnett Banks in Jacksonville, Fla.,
before Monday's report.
The Fed report showed that credit card borrowings rose $2.8
billion in August, auto loans increased by $200 million, and other
types of personal loans rose by $400 billion. The Fed's report
doesn't track loans secured by real estate.
The report also showed that the pace of consumer credit was rising
at a 3.5 percent annual rate during August. That's the slowest pace
since May of 1993 and down from the 7.6 percent pace of borrowing in
Economists use the Fed's consumer credit statistics to monitor the
health of household finances as a way of making predictions about
future consumer spending, which accounts for two-thirds of overall
economic activity in the U.S.
In response to a rise in loan delinquencies earlier this year, the
Federal Deposit Insurance Corp., the agency responsible for insuring
Americans' bank deposits, stepped up its monitoring of bank credit
card operations. …