Consumer Debt Declines for First Time in 2 1/2 Years
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WASHINGTON — The economic slowdown caught up with American consumers in July as they paid off $280 million more in credit than they borrowed, the Federal Reserve Board reported Friday. It was the first reduction in consumer debt in 2 1/2 years.
But analysts predicted that the decline in borrowing was temporary and, considering other reports indicating continued although slower economic growth, should pick up in the months ahead.
The Fed said consumer credit in July declined at a seasonally adjusted annual rate of 0.5%, down from June’s 4.7% gain. But even the June advance was revised downward from 5.1%, falling to $2.72 billion from $2.99 billion.
The July decline was the first since January, 1987, when consumer debt fell $1.63 billion, or 3.4%.
Auto loans, which fell for the second straight month, contributed most to the July credit cutback, the Fed reported.
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