WASHINGTON - U.S. consumer credit increased in March at the slowest pace in almost eighteen months as households limited their credit card use and demand declined for car loans and other borrowing, Federal Reserve statistics showed.
The increase of $6.2 billion for the month followed a rise of $13.4 billion in February, according to the Fed's report. Credit rose at a 4.7% annual rate in March after rising at a 10.3% pace a month earlier.
With the economy slowing, businesses eliminating jobs, and confidence waning, "consumers are cutting back and not spending as much to support their lifestyle," said Cynthia Latta, an economist at Standard & Poor's DRI in Lexington, Massachusetts, before the report.
Auto and other personal loans fell $455 million in March, the first decline since April 2000, after rising $2.4 billion during February. Revolving loans, which include credit cards, rose $6.6 billion in March after rising $11 billion in February.
The pace of borrowing in March was the slowest since a 4.7% rate in October 1999, the Fed's figures showed. Before today's report, analysts expected borrowing to increase by $9.5 billion in March after a previously reported February rise of $13.5 billion, according to a Bloomberg News survey.
Economists monitor the Fed's report as one gauge of consumer demand. Consumer spending accounts for about two-thirds of the economy. While the statistics include credit card debt as well as loans for autos and mobile homes, the numbers don't include home equity loans or other debt secured by real estate.
Falling interest rates have led to an increase in home refinancing, saving consumers money on interest payments. In the week ended March 23, mortgage refinancing rose to the highest level since October 1998, according to Mortgage Bankers Association of America.
The economy grew at a 2% annual rate in the first three months of this year, double the pace in the fourth quarter, which was the slowest in more than 5 years, according to Commerce Department statistics. With employers eliminating jobs and consumer confidence at a 4-year low, spending was sluggish at the end of the first quarter. Retail sales fell 0.2% in March after no change a month earlier, the Commerce Department said.