U.S. Consumer Credit Seen Rising

Growth in consumer credit may have picked up in July as auto sales staged a rebound, economists said ahead of a Federal Reserve report in Washington. Fed Chairman Alan Greenspan will talk about the economy in congressional testimony.

U.S. consumer borrowing through charge cards, car loans and other non-mortgage debt is expected to show a $7.5 billion increase for the month, according to the median of 42 forecasts in a survey by Bloomberg News. In June, consumer borrowing rose by $6.6 billion. The Fed issues the report at 3 p.m. local time.

“We’ve seen auto loans priced very aggressively” as dealers and manufacturers try to cut inventories, said Lynn Reaser, chief economist at Banc of America Capital Management in St. Louis.

Greenspan testifies on the economy and the government’s budget deficit to the House Budget Committee at 10:30 a.m. in Washington. The Congressional Budget Office predicts that the deficit will reach $348 billion in fiscal year 2005, which starts Oct. 1, after a record $422 billion in 2004.

Budget office forecasters cite continuing expenses for the U.S. military in Afghanistan and Iraq as reasons for the shortfall and said the improving economy would cause the gap to narrow from this year. The forecast was issued yesterday.

In fiscal 2003, the government reported a record deficit of $374.2 billion, according to the Treasury.

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