CONSUMER DEBT RISES SHARPLY.Byline: John D. McClain Associated Press Associated Press: see news agency. Associated Press (AP) Cooperative news agency, the oldest and largest in the U.S. and long the largest in the world. Americans' installment debt Installment Debt Debt issued with the condition of regularly occurring intervals for payment by the debtor, until the principal and interest are paid in full. Notes: grew in February at the fastest pace in eight months as each of the major categories of consumer credit posted sharp gains. The Federal Reserve said Friday that consumer installment credit Noun 1. installment credit - a loan repaid with interest in equal periodic payments installment loan consumer credit - a line of credit extended for personal or household use loan - the temporary provision of money (usually at interest) shot up 13.9 percent at an annual rate, the steepest climb since rising 14.4 percent in June. The $12 billion increase was the biggest since a $12.8 billion advance in May. The increase boosted total consumer debt to $1.048 trillion, 14 percent higher than in February 1995. Many analysts had expected debt to grow just $10 billion, down from $10.9 billion in January, when credit rose at a 12.7 percent rate. Consumer credit includes all household debt not secured by real estate. Analysts contend that consumers eventually will have to rein in to check the speed of, or cause to stop, by drawing the reins. to cause (a person) to slow down or cease some activity; - to rein in is used commonly of superiors in a chain of command, ordering a subordinate to moderate or cease some activity deemed excessive. See also: Rein Rein their borrowing activity as debt levels climb and income growth remains relatively slack. In fact, there already have been reports of growing delinquency rates in several areas. This generates concerns about the pace of consumer spending, which represents about two-thirds of the nation's economic activity. Spending grew just 1.2 percent during the final three months of 1995, down from gains of 2.8 percent in the third quarter and 3.4 percent in the second. But in February, revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. , which includes credit cards, jumped $6.4 billion, the biggest advance since $7.4 billion in May. The 19 percent annualized gain Annualized gain If stock X appreciates 1.5% in one month, the annualized gain for that stock over a twelve month period is 121.5% = 18%. Compounded over the 12 month period, the gain is (1.015)^12 -1 = 19.6%. was the steepest since 20.5 percent in June. The increase pushed total revolving debt to $407.2 billion. Automobile loans rose by $3 billion, a 10.3 percent annualized gain, and pushed motor vehicle debt to $359.3 billion. The credit category that includes loans for mobile homes, education, boats, trailers and vacations increased $2.6 billion. The 11.3 percent rate of advance lifted this debt category to $281.2 billion. |
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