Consumer Credit Continued Surge In July, Fed Says --- But Increase of $7.11 Billion Was Smaller Than Rises In Previous Two Months
WASHINGTON -- Consumer credit in July continued to grow at a rapid rate, although the pace was slower than in the previous two months, the Federal Reserve Board said.</br></br>Consumer credit increased a seasonally adjusted $7.11 billion in July, the board said, after rising $7.83 billion in June and a record $10.23 billion in May.</br></br>Alan Murray, vice president of Citicorp Information Services, said the July figures show that "consumer demand remains strong," despite other signs that the vigorous economic recovery may be slowing. He said the continued heavy borrowing suggests that consumer spending isn't about to decline precipitously, as some consumer-goods producers had feared.</br></br>Still, Mr. Murray doesn't expect such unusually strong growth in consumer credit to continue. "With increases like these," he said, "sooner or later, the consumer has to run out of gas."</br></br>The Fed report showed that consumer credit grew at a 19.75% annual rate in July, compared with an average annual pace of 24% during the second quarter and 11.5% for all of 1983. Stephen Roach, senior economist at Morgan Stanley & Co., said a further slowdown in consumer credit growth would be welcome because it would relieve upward pressure on interest rates.