THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Tuesday, October 8, 1996 TAG: 9610080321
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: 27 lines
Consumer debt grew at the slowest rate in more than three years in August, rising at an annual rate of just 3.5 percent.
The Federal Reserve reported Monday that the August increase followed a July gain of 7.6 percent at an annual rate.
In dollar terms, consumer debt rose by $3.3 billion in August after increasing $7.3 billion in July.
According to analysts, the slowdown occurred when consumers burdened by record-high debt cut down on borrowing. Many banks have been tightening credit standards because of rising delinquencies and personal bankruptcies.
``The runup in consumer debt was reaching unsustainable proportions,'' said Chris Varvares of Macroeconomic Advisers in St. Louis.
The slowdown in borrowing was expected to slow the growth of consumer spending, which accounts for two-thirds of the total economic activity.
Varvares said he believed the gross domestic product, which raced ahead at an annual rate of 4.7 percent in the second quarter, grew by a much slower 2 percent in the third quarter.
KEYWORDS: CONSUMER DEBT by CNB