Consumer credit falls sharply
Total borrowing slides by more than $10 billion in June, as widespread unemployment continues to plague spending.
NEW YORK (CNNMoney.com) -- Consumer credit fell in June for the fifth straight month, as widespread unemployment curbed spending, a government report said Friday.
Total consumer borrowing sank a seasonally adjusted $10.3 billion, or 4.9%, to $2.503 trillion, according to the Federal Reserve. The report measures how much debt consumers have outstanding.
Economists predicted a decline in total borrowing of $5 billion in June, according to a consensus survey from Briefing.com.
The reduced borrowing comes as the economy sheds jobs by the thousands, and mass layoffs and pay cuts have limited consumer spending power. At the same time, banks have tightened lending standards due to growing concerns about default risk.
A separate Friday report showed the unemployment rate fell to 9.4% from 9.5% in June, the first decline since April of 2008. Economists had expected a rise to 9.6%, but the current rate remains high.
Consumer credit began contracting last August, the first decline since January 1998. It rebounded in September before contracting again and fell for three consecutive months to close out 2008.
Revolving credit, which includes credit card debt, fell $5.3 billion, or 6.8%, to $917 billion.