Consumer Debt Drops Despite Rise in Credit Card Borrowing
WASHINGTON — American consumer debt fell modestly in February despite a sharp increase in credit card borrowing, the government said Monday.
Consumer credit fell $199 million to $729.3 billion, a 0.3% decline at a seasonally adjusted annual rate, the Federal Reserve said. That followed a revised 0.1% rise in January, originally reported as a 0.3% drop.
Most economists had expected a $500 million or so increase in February. They were not overly concerned by the drop because other reports have shown sales gains at auto showrooms and department stores.
“We know spending was pretty good, so the fact that consumer credit is declining modestly suggests consumers are still paying for things with cash,†said economist Samuel D. Kahan of Fuji Securities Inc. in Chicago.
For all of 1991, consumer debt fell 0.8%, the first drop in 33 years. Federal Reserve Chairman Alan Greenspan and other economists have said that the shrinking of debt accumulated during the 1980s is an important precursor to stronger economic growth.
Automobile loans in February fell at an annual rate of 2.1% after a 1.6% rise in January, the first in 13 months.
Revolving credit, which includes credit cards, rose at a 6.1% rate. Mobile home loans fell at a 23% rate. Other consumer loans, which include bank, savings institution and credit union loans, fell at a 3.2% rate.
The report includes all loans to consumers except home mortgages and home equity loans.
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