Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, February 6, 1993 TAG: 9302060166
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
CONSUMERS GET BACK ON CREDIT BANDWAGON
American consumers borrowed heavily to buy cars in December, driving up their outstanding debt at the fastest rate in nearly two years, the government reported Friday.Consumer installment credit rose at a seasonally adjusted annual rate of 4.1 percent in December to $725.9 billion, the fourth consecutive monthly increase, the Federal Reserve said.
It was the biggest increase since borrowing rose at a 6.4 percent rate in February 1990.
For the year, consumer credit was down 0.3 percent. That followed a 1 percent drop in 1991 - the first since 1958 - and a 2.6 percent gain in 1990.
The cutback in borrowing during the recession and subsequent economic doldrums was a reaction to the huge debt levels that many consumers had built up during the go-go years of the 1980s.
Borrowing finally began increasing after many Americans had reduced their monthly payments by refinancing their mortgages and other loans at lower interest rates.
However, economists said, consumers are unlikely to revert completely to the free-spending ways of the previous decade until the economy begins providing more jobs.
"A number of families have reduced their debt loads, but they're more cautious. . . . I would not look for a sudden surge of borrowing and spending," said Norman Robertson, a private economist in Pittsburgh.
Automobile loans advanced at a 7.3 percent annual rate to $259.3 billion, following a 4.2 percent increase in November.
Revolving loans outstanding, which includes credit card balances, increased at a seasonally adjusted annual rate of 1.7 percent to $251 billion, the fifth consecutive increase.
Other consumer loans rose at a 3.1 percent annual rate to $215.6 billion. This category includes loans for mobile homes, education, boats, trailers and vacations.