Consumer Borrowing Rises in April
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WASHINGTON (AP) _ A bit tightfisted in March, consumers borrowed money more freely in April, especially with their credit cards.
Total consumer credit increased by a seasonally adjusted $13.9 billion in April, or a 10.7 percent annual rate, the Federal Reserve reported Thursday. That was a much bigger increase than the $9 billion rise in credit that many analysts were forecasting.
``It’s really a function of those low interest rates. Consumers can’t get enough of that easy money,″ said Richard Yamarone, economist with Argus Research Corp. ``They are ringing up those cash registers.″
Discounted merchandise, cheap financing and an improvement in the stock market’s performance in April are all factors that influenced spending, economists said.
April’s pace of borrowing was nearly twice as fast as in March, when total consumer credit rose at a revised 5.7 percent rate, or by $7.5 billion. The revised figures show that consumers borrowed more in March than the Fed previously estimated, but they still represented the weakest usage of credit this year.
The Federal Reserve has cut interest rates five times this year, driving down borrowing costs to the lowest point in seven years.
In April, demand for revolving credit, such as that used for credit cards, led the way. Revolving credit rose by $9.2 billion, or at an annual rate of 16 percent, compared with $6.8 billion and a 11.9 percent rate in March.
``With low interest rates and well-priced goods _ with the exception of gasoline _ consumers are charging up a storm,″ Yamarone said.
Nonrevolving credit, such as loans for new cars, vacations and other big-ticket items, grew by $4.8 billion, or at an annual rate of 6.5 percent. That compared with $650 million and a 0.9 percent rate the month before.
The Fed’s report on consumer credit includes credit card debt and loans for autos, boats and mobile homes. It does not include loans backed by real estate, such as home mortgages or increasingly popular home equity loans.
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