WASHINGTON — U.S. consumer credit increased in September at the slowest pace in five months as declining stock prices eroded confidence and restrained Americans' willingness to spend, Federal Reserve statistics showed Tuesday.
The $6.4-billion increase in September, reflecting less credit card use and fewer auto and personal loans, followed a revised rise of $12.3 billion in August.
The September increase was the smallest since $6.4 billion in April and suggests consumer spending, two-thirds of economic output, could start to slow.
"Things aren't quite as good as before" in the stock market and the economy, said Cynthia Latta, an economist at Standard & Poor's DRI in Lexington, Mass. "There are more layoffs going on, and consumer confidence has slipped."
What's more, "consumers may also just be bought out" after a spending spree in the first quarter that was the strongest in 17 years.
At the end of the third quarter, the annual rate of consumer credit growth was 7%, down from 9.4% in the second quarter and 10.2% in the first, the Fed said.
Revolving loans, which include credit cards, rose $3.6 billion in September, after rising $6.7 billion during August. Auto and other personal loans increased $2.8 billion in September, after rising $5.6 billion during August.
Economists and investors monitor the Fed's report as one gauge of consumer demand. Although the statistics include credit card debt as well as loans for autos and mobile homes, the numbers don't include home equity loans, mortgages or other debt secured by real estate.