Total consumer credit outstanding grew at a seasonally adjusted annual rate of 4.9 percent in May, the smallest month-to-month change in the past 12 months. This followed on the heels of the second smallest monthly rise in a year -- 7.2 percent in April.

Automobile credit grew in May at an annualized rate of only 3.4 percent, down from 10.8 percent in April. Revolving credit (credit card debt) slipped from a growth rate of 20.3 percent in April to a 16.1 percent rate in May. Other credit, which includes all loans that are not accounted for as automobile or revolving credit, fell at an annualized rate of 8.0 percent in May following an even greater fall off of 13.1 percent in April.

Looking back over the past 14 months we can see that the growth rate for total consumer installment credit has been declining. In the second quarter of 1995 the average annualized growth rate was 16.1 percent, in the third quarter it decreased to 14.4 percent, and in the fourth quarter it fell to 10.5 percent. At 11 percent, the growth rate in the first quarter of 1996 was just about the same as the preceding quarter. But, the average growth rate for the two second-quarter months for which data is available has been just 6.1 percent.

It looks like the rise in long-term and intermediate-term interest rates since the first of the year may be showing up in the form of hesitancy among consumers to take on additional debt. We'll see whether this is having any overall effect on consumer spending when we see the retail sales report on Friday.

Byline: Lafferty (MF Merlin)