Americans paid off $560 million more in credit than they borrowed in May, which is the first reduction in consumer debt in nearly five years, the government reported yesterday.
The Federal Reserve said the rate of decline in consumer debt, 1.1 percent at an annual rate, is the largest since a 4.5 percent decline in July 1980. The last time consumer borrowing dropped was in July 1982, when it went down a scant $4 million.
But at the same time, the Fed revised upward its estimate of consumer borrowing during April. Originally pegged at $2.93 billion, net consumer borrowing during the month actually was $3.68 billion, a $750 million change, the Fed said.
Outstanding revolving credit, which includes credit cards, did increase by $108 million during May. But the growth worked out to an annual rate of 0.9 percent, down sharply from a 13.7 percent growth rate for April.
Borrowing for auto purchases was down by $155 million in May after a $1.3 billion increase in April, and borrowing for mobile-home purchases was down by $142 million after a $12 million increase in April.
The category that includes bank and credit union loans not secured by real estate showed a decrease of $367 million after a $756 million increase in April.
The Fed said the growth in installment credit has slowed sharply over the first five months of the year. Through May, installment debt has been increasing at an annual rate of only 2.25 percent, down from 10.5 percent during 1986.
The Fed said part of the reduction is due to the growing popularity of home equity loans, which do not show in the statistics because they are secured by real estate.
But analysts also have said that consumers were cutting back on spending because of high debt loads and slow growth in personal income.
Total consumer debt stood at $583.0 billion in May. All of the figures are adjusted for normal seasonal variations.