Consumer credit drops $3.6B in October

Federal Reserve says borrowing by consumers fell at an annual rate of 1.6% in the month.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Ben Rooney, CNNMoney.com staff writer

Do you know anyone who has lost a job recently?
  • I have
  • A friend or family member
  • No

NEW YORK (CNNMoney.com) -- Consumer borrowing unexpectedly decreased in October as the weak economy continued to weigh on household budgets.

The Federal Reserve said Friday that consumer borrowing fell by $3.6 billion in October to $2.578 trillion from an upwardly revised $2.581 trillion in September.

The annual rate of consumer borrowing fell by 1.6% in the month. In September, the annual rate grew by 3.1%.

Credit card borrowing, or revolving debt, declined at an annual rate of 0.2%. Non-revolving borrowing, including student and auto loans, fell $3.4 billion dollars, or 2.5% on an annual basis.

Economists were expecting consumer credit to have increased by $1.5 billion in October, according to a consensus of economists' estimates gathered by Briefing.com.

Declines in consumer borrowing "don't happen very often," said Bob Brusca, economist at Fact and Opinion Economics in New York.

In August, consumer borrowing decreased by $6.3 billion, or 3% on an annual basis. That was the first time borrowing had declined since January 1998, and was due mostly to a sharp drop in auto loans.

"Consumers are feeling the pinch," Brusca said. "They're strapped for cash and starved for credit."

He pointed out that weak sales have taken a toll on auto loans and declining home values have deterred homeowners from borrowing against their property.

"Consumers don't feel they have the asset power to borrow against," he said. "They have no prospect for a raise and may not have a job."

The pullback in borrowing comes as American consumers struggle with a dismal job market and an economy that is in recession.

A report from the Labor Department showed Friday that the economy lost 533,000 jobs in November, the largest monthly job loss in 34 years. So far this year, the economy has lost nearly 2 million jobs.  To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Secrets to success from Smalltown USA University of Utah professor Michael Glauser cycled 4,000 miles this summer, visiting 100 entrepreneurs across the country. Here's a snapshot of how they grew their businesses. More
7 scams that will make your blood boil All scams are heartless. But these seven schemes, which prey on the nation's most desperate and vulnerable -- from the homeless to the elderly -- will really make you mad. More
For sale: The world's most expensive apartment A penthouse apartment in Monaco is expected to sell for $400 million. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.