WASHINGTON — Consumers cut their credit buying sharply in October, taking out only about half as many new car loans as in September and restraining bank and credit union borrowing, the Federal Reserve Board said Monday.
Total outstanding credit, or debts owed, expanded by $3.74 billion in October after growing by $6.43 billion in September, the Fed said in its monthly report on consumers' use of installment credit.
Analysts have been monitoring credit use closely in the wake of the Oct. 19 stock market crash to see whether the loss of billions of dollars in consumer and corporate wealth will slow economic expansion.
The Fed report said auto financing in October grew by $1.63 billion, less than half the $3.46 billion growth in September.
The other major credit category that fell sharply was bank and credit union loans, which grew by $555 million after a $1.09-billion expansion in September.
Revolving credit, which includes buying through credit cards, grew during October by $1.57 billion, compared to $1.87 billion in September.
The category, which includes bank loans not secured by real estate, edged up $555 million in October following a $1.1-billion September increase.
One type of credit, for mobile home purchases, fell in October by $10 million after growing $4 million in September, the Fed said. A fall in credit means some loans were paid off.
Consumer spending accounts for about two-thirds of the nation's gross national product, the measure of total goods and services output. Any prolonged slowdown in consumer willingness to spend slows GNP growth.
The Fed survey found that the average interest rate for 48-month new-car loans offered by commercial banks in November was 10.86%, compared to a rate of 10.58% a year ago.