Consumer Debt Increases By $6.63 Billion

Americans took on $6.63 billion more in consumer debt than they paid off in October, down sharply from the record debt growth of September, the Federal Reserve Board reported Tuesday.

The October rise in debt was 43% below the all-time high increase of $11.53 billion incurred in September, the Fed said.

The September increase, which was revised upward from an original estimate of $10.63 billion, topped the old mark of $9.09 billion set in May, 1984.

October’s big drop in consumer credit did not surprise analysts, given the fact that auto sales fell sharply following two months of strong sales spurred by attractive cut-rate financing deals.

Auto financing, which had risen by a record $7.2 billion in September, rose by a much smaller $3.65 billion in October.

All-Time High

The various changes left total consumer installment debt at $529.65 billion on a seasonally adjusted basis at the end of October and put the ratio of consumer debt to disposable income at an all-time high of 19.4%.

Many analysts fear that the economy will be weak in coming months as consumers, who account for almost two-thirds of total economic activity, will begin to cut back on spending in coming months because of the high debt burden.

The debt report provided these other details:

- Cash loans from banks and other short- and medium-term personal debt rose by $1.29 billion in October, down from the September rise of $2.18 billion.

- The category that includes credit card debt rose by $1.52 billion in October, compared to a September increase of $1.97 billion.