Posted on: Thursday, May 8, 2003

Cautious consumers pare back on borrowing

By Jeannine Aversa
Associated Press

WASHINGTON — Consumers worried about their jobs turned cautious in March and increased their borrowing by the smallest amount in four months.

The Federal Reserve reported yesterday that consumer credit rose by just $930.8 million in March from the previous month, or at a seasonally adjusted annual rate of 0.6 percent, the slowest pace since November.

The increase pushed total consumer debt up to $1.74 trillion.

March's borrowing figures represented a slowdown from February, when consumers increased their borrowing at a 0.9 percent pace, or by $1.3 billion.

Economists say consumers are more mindful of their borrowing and debt burdens given the listless economy and a stagnant job market.

A big part of the slowdown in March came from consumers cutting back on borrowing for cars and other big-ticket items.

Demand for such nonrevolving credit, which also includes loans for education and vacations, fell by $1.4 billion, or at a rate of 1.7 percent in March from the previous month. That came on top of a 2.7 percent rate of decline in February, or a cutback of $2.3 billion, in nonrevolving credit.

Demand for revolving debt, such as credit cards, went up by $2.3 billion in March, or at a rate of 3.9 percent. That compared with $3.5 billion increase in February, or a 5.9 percent growth rate.

The Fed's report on consumers does not include real-estate loans such as home mortgages.