Economic statistics don't paint a true picture of the consumer debt burden, according to a MasterCard International study.

The report, written by Lawrence Chimerine, consulting economist to MasterCard, calls for an overhaul in the way consumer debt is measured. He urges that a task force of government and industry representatives develop a new method to gauge consumer debt.

Mr. Chimerine, managing director and chief economist of the Economic Strategy Institute in Washington, examined available measures of consumer debt and delinquency rates in 1996. He found that the average American consumer is in good fiscal health and that delinquency rate models need to be reengineered to improve the reliability of the statistics.

"We've got to do a better job now of measuring what's really debt, what isn't debt, how it's changed, if we're going to assess the financial well- being of consumers because of these changes that have taken place," Mr. Chimerine said in an interview.

The study defines consumer debt as the accumulation of secured and unsecured credit-credit cards, home mortgages, home equity lines, installment loans, and auto loans.

The study shows that growth in consumer debt has slowed to about 6% this decade, well below the double-digit increases in the 1970s and 1980s.

The release of Mr. Chimerine's study for MasterCard coincided with the American Bankers Association's report that bank card delinquencies were at record levels at yearend 1996. The ABA composite index of closed-end loans also increased slightly.

Rather than overborrowing, Mr. Chimerine said, recent increases in delinquencies reflect the changing role of credit cards as well as consumers' proclivity to use unsecured credit rather than traditional loans.

The ratio of outstanding debt to disposable personal income overstates the debt burden of the household sector, his study said. In many households, credit cards are being substituted for cash and checks as a method of payment.

Credit cards have captured volume from cash and checks in the past six years, the study noted, growing from 13% to 19%. (See chart).

Also, the percentage of card balances paid in full rose from 20% in 1989 to 40% in 1995. During that period, the percentage of all credit card charges by convenience users jumped 10 points, to 60%.

Convenience use is not reflected in the Federal Reserve Board's monthly revolving credit statistic, Mr. Chimerine said. As a result, he estimated that the amount of credit card debit reported by the Fed is 20% overstated.

Statistical methods should be developed to differentiate credit card convenience from other consumer borrowing, he said. The model should also take into account new consumer spending and borrowing patterns. For example, how consumers turn to credit cards instead of traditional, secured personal loans or business loans, he said.

"A lot of our economic statistics are out of date because they haven't kept pace with new products, or financial innovations, or the way people manage their personal finances," Mr. Chimerine added.

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