Consumer Borrowing Slowed in April : Experts Call It Healthy Trend as U.S. Attempts to Boost Exports

Americans increased their installment borrowing at a moderate annual rate of 7% in April as growth in consumer credit slowed from the first three months of the year, the government said Tuesday.

The Federal Reserve Board said consumers took out $3.65 billion more in credit, which includes all borrowing other than mortgages and home equity loans, than they paid off in April, compared to net growth of $5.2 billion in March, $5.0 billion in February and $6.2 billion in January.

The annual rate of growth in April was slightly slower than the 7.2% rate for all of 1987 and considerably slower than the approximately 10.7% pace for the first quarter of 1988.

However, economists saw the slowing as a healthy trend at a time U.S. manufacturers are trying to boost their production for export.

“What’s happened is what should be happening. Consumer spending is cooling off and freeing up resources to produce for export,” said Sandra Shaber, an economist with the Futures Group, a Washington consulting firm.

Credit Card Debt Up

“The whole transition from a consumer-led economy to an export-led economy assumes we can cool off consumer demand in order to avoid heated up inflation,” she said.

She said consumer debt grew faster than the norm in the January-March period because of a surge in auto sales.

In April, auto loans grew by $1.55 billion, a yearly growth rate of 6.7%, compared to a rate of 15.9% in March and 14.5% in February.

The category that includes credit card debt showed the strongest increase in April--$1.61 billion for an 11.7% expansion pace, compared to 16% in March and 10.3% in February.

The credit report said the category that includes bank and credit union loans not secured by real estate increased by $478 million in April, a 3.6% jump, compared to a 3.7% decline a month earlier.

Borrowing for mobile homes increased by $13 million, or 0.6%, after a drop of 5.8% in March.

The various changes left total consumer debt at $633.1 billion at the end of April, up 9.1% from a year earlier.

Still, Shaber said consumer borrowing as a percentage of income has remained steady at just under 19% for a year and a half.