
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, February 8, 1991                   TAG: 9102080062
SECTION: BUSINESS                    PAGE: A-7   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

CONSUMER CREDIT FALLS/ SURPRISING DECEMBER PLUNGE IS STEEPEST IN FOUR YEARS

Consumer credit fell at an annual rate of 2.3 percent in December, the steepest decline in nearly four years, the Federal Reserve said Thursday. The report surprised analysts, because December usually is a busy January sales down at many major store chains. A9 shopping month.

Economist Sandra Shaber of the Futures Group in Washington cited consumer fears about the economy.

"We have lost a million jobs since June," she noted. "Wage rates are way behind inflation. In many areas, the values of homes are declining. People are worried about the banking situation."

As a result, she said, "people are not buying much of anything and therefore are not using their credit cards."

Economist Bill Wood of Cahners Economics in Newton, Mass., said the decline would not have been so unexpected in January, usually a slow time for retailers and other store owners.

"It does not bode well for January," he said, suggesting that month's credit report could be worse because of the added element of concern over the start of the Persian Gulf war.

The Fed said consumer installment debt dropped a seasonally adjusted $1.45 billion, the first decline since a 0.2 percent dip in February 1989 and the sharpest since a 5.2 percent drop in February 1987.

For the year, credit growth slowed to just 3.1 percent, compared with 6 percent in 1989 and 8.5 percent in 1988. November's 4.5 percent growth was stronger than the 2.8 percent gain first reported, however.

Consumer credit includes all loans except mortgages and home-equity debt. Total consumer spending represents about two-thirds of the nation's economic activity.

Only automobile loans increased in December. All other types of consumer debt, including credit-card debt, declined in the month that included the bulk of Christmas shopping.

Auto loans, which had fallen for six months until a slight 0.3 percent gain in November, rose another 3.3 percent, or a seasonally adjusted $786 million, in December.

Revolving credit, the category that includes credit cards, fell 6.7 percent after increasing 7.6 percent in November, the last week of which has marked the start of the holiday shopping season.

Total revolving debt fell $1.23 billion in December against a $1.38 billion gain the previous month.

Bank and credit-card loans not secured by real estate fell 1.2 percent, or $219 million, after a 7.3 percent advance a month earlier. Borrowing for mobile homes was down 42 percent, or $788 million, following a 1.4 percent gain in November.

The various changes left total consumer debt at the end of December totaling $749.9 billion.

by CNB