Installment Credit

Tuesday, June 7

The April level of consumers' outstanding installment debt is expected to have risen by a hefty $5.8 billion, following a large $7.4 billion increase in March. That's the median expectation of economists surveyed by MMS International, a unit of McGraw-Hill Inc. Better growth in jobs and income is making it easier for households to borrow. However, since earnings are rising apace with new debt, the ratio of installment credit to aftertax income has not risen appreciably. In March, the ratio stood at 16.4%, well below its peak of 18.7% in 1989. Credit growth may soon begin to slow, though, since sharply higher interest rates are likely to cool off the recent spending boom in consumer durables.

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