Growth of Consumer Borrowing Slows

Americans increased their borrowing in July at the slowest pace in four months, and the gain in credit card debt fell off sharply, the government reported Friday in another sign that consumers are turning more cautious.

The Federal Reserve reported that consumer borrowing rose at an annual rate of 2.8% in July, down from an increase of 7.3% in June. The slowdown was led by a sharp deceleration in credit card debt, which rose by just 3.4% in July after gains of 13.2% in June and 13% in May.

Borrowing to buy autos also slowed in July to an annual rate of gain of 2.5% after an increase of 4% in June.

All of the increases pushed consumer debt up by $5.5 billion in July after an increase of $14.1 billion in June, which originally had been reported as a gain of $10.3 billion. The July increase was less than the $6.5-billion advance economists had been forecasting.

“This is just another signal that the economy is moving into a consumer-led slowdown,” said Bill Hampel, chief economist for the Credit Union National Assn., an industry trade group.

The increases left consumer credit at a record level of $2.35 trillion in July. The Fed’s measure of consumer credit does not include mortgages and other loans secured by property.

Consumer spending, which accounts for two-thirds of the total economy, slowed abruptly in the spring, pushing overall economic growth down to a 2.9% rate of increase.

Analysts believe that consumer spending will remain sluggish in coming months as Americans struggle with high energy prices and interest rates.