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Consumer Borrowing Falls for 10th Straight Month

Consumer borrowing fell for the tenth consecutive month in November with total credit and borrowing on credit cards falling by the largest amounts on record. The declines raise fears that efforts by consumers to get their financial houses in order may prevent the kind of spending needed to sustain an economic recovery, as consumer spending accounts for 70% of total economic activity. The Federal Reserve said total borrowing dropped by $17.5 billion in November, the biggest amount in dollar terms since records began in 1943. That represents an 8.5% drop from the October borrowing level. It was the biggest percentage drop since total credit declined 9% in May 1980.

The borrowing category that includes credit cards fell by 18.5%, or $13.7 billion, in November. Borrowing in that category has fallen for 14 straight months. Americans are borrowing less because they remain fearful about their job prospects and they are trying to replenish investments that were decimated during the long recession. But, even consumers who would like to increase their borrowing are finding it hard to get credit as bank lending remains sparse.

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Date Last Updated: 01/14/2010

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