WASHINGTON – Americans increased their borrowing at a 2.4 percent annual rate in May, significantly slower than in April, as a big jump in credit card borrowing was not enough to offset a slowdown in the growth of auto loans, the Federal Reserve reported Monday.
The Fed said May's increase followed a huge 5.2 percent rise in April. The slowdown occurred because of weakness in auto loans, which offset the jump in credit card borrowing.
Economists believe that the economy is slowing to a more moderate pace as consumers, faced with soaring gasoline prices, cut back their spending in other areas.
For May, the non-revolving loans — the category that includes auto loans — fell at an annual rate of 2 percent, reflecting the weakness in sales during the month. It was the biggest decline in this category since a 5.9 percent drop last October.
Borrowing on credit cards and other categories of revolving debt shot up at an annual rate of 9.9 percent in May, the biggest surge in this category since a 13.5 percent increase in October 2004.
The total amount of borrowing rose at an annual rate of $4.4 billion in May to total $2.17 trillion. That compared to an increase of $9.34 billion in April and was slightly ahead of the $3.2 billion increase in borrowing that economists had been forecasting.
It marked the seventh consecutive month that consumer borrowing has increased.
Analysts believe that consumer spending, which accounts for two-thirds of the total economy, slowed in the spring and will continue at more moderate levels for the rest of the year, in part because soaring gasoline prices have left Americans with less money to spend on other items.
Many economists are forecasting that the overall economy, which grew at an annual rate of 5.6 percent in the first three months of this year, the fastest pace in 2 1/2 years, slowed in the spring to a growth rate around 2.5 percent to 3 percent.