March Rise in Consumer Debt Smallest in 3 Years

WASHINGTON — Americans took out $3.71 billion more in consumer debt than they paid off in March, the smallest monthly increase in almost three years, the government said Monday.

The Federal Reserve Board said the March rise translated into an annual increase in debt of 8.1%, compared to an 11.1% growth rate in February, when debt rose by $5.01 billion.

For the first three months of the year, consumer debt was growing at a rate of 12.2%, down sharply from the 18% rise for all of 1985. The March advance was the slowest since a $2.11-billion increase in May, 1983.

Many economists have predicted a sharp cutback in consumer spending this year as Americans, worried about rising debt burdens and low savings rates, spend less on such big-ticket items as new cars.

Retail sales so far this year have been weak, with sluggish growth in this area holding back overall economic performance.

Analysts said that much of the big March decline came from a sharp drop in auto sales but that other factors were at work as well.

Sandra Shaber, director of consumer economics for Chase Econometrics, a forecasting concern, said tighter loan requirements on the part of banks and finance companies worried about loan defaults are playing a part in the slowdown in credit growth.

“There is some concern about bad debt,” she said. “But I think we will see some modest increases in credit growth in the second half of the year as people start buying new furnishings and appliances for all the new homes they are buying.”

In March, auto loans increased $1.09 billion, an annual growth rate of 6.1%, compared to a $2.69-billion advance in February, when car loans were growing by 15.3%.

Other details of the debt report:

- Cash loans from banks and other short- and medium-term personal debt rose $926 million in March, compared to a $1.17-billion February advance.

- Revolving debt, including credit cards, rose by $1.47 billion in March following a February advance of $1.04 billion.

- The various changes put total consumer debt at $551.47 billion at the end of March.