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Fed reports slowdown in consumer borrowings in May '06; revolving loans surge

by : Ravi Chopra

Date : Tue, 11 Jul 2006 13:12:01 GMT





WASHINGTON: Consumer credit grew at a slower pace in May 2006 compared to the previous month, according to a Federal Reserve report yesterday. lt;br / gt; lt;br / gt; Auto loans, one of the key indicators of growth in non-revolving loans, slid considerably taking the category in a decline at an annual rate of 2.2 percent. The only other time this category of loans had dipped as sharply was in October 2006 when it dropped 5.9 percent. lt;br / gt; lt;br / gt; Overall consumer borrowing grew at an annual rate of 2.4 percent or $4.4bn which is in sharp contrast to previous month 's growth at an annual rate of 5.2 percent or $9.34bn. lt;br / gt; lt;br / gt; While consumer borrowings slowed down noticeably, wholesalers were slightly better off with sales up 1.6 percent and inventories also exceeding expectations with a 0.8 percent growth. lt;br / gt; lt;br / gt; Revolving debt including credit card borrowings surged to grow during May at an annual rate of 9.9 percent - a 15-month high. The category had peaked at 13.5 percent in October 2004. lt;br / gt; lt;br / gt; Analysts said the slowdown in consumer borrowings reflects a tightening of belts as skyrocketing fuel prices forced consumers to cut spending. As consumer spending is a key driver of the US economy, economists expect the economic growth to also slow down to a more moderate pace. lt;br / gt; lt;br / gt; May 2006 was the seventh consecutive month of an uptrend in consumer credit.



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