U.S. consumers cut back borrowing in October

Special Report:Global Financial Crisis

WASHINGTON, Dec. 7 (Chinese media) -- U.S. consumer credit fell at an annual rate of 1.6 percent in October, the deepest decline since August, the Federal Reserve reported Friday.

The 1.6 percent decline, or 3.5 billion dollars, followed a revised 3.1 percent growth rate logged in September and surprised analysts who had been expecting an increase of 2 billion dollars for October.

Consumer borrowing, which the Federal Reserve defines as all loans not secured by real estate, totaled 2.58 trillion dollars in October.

For October, consumer borrowing in revolving loans, a category that includes primarily credit card debt, declined by 0.2 percent at an annual rate, down from a 3.1 percent growth rate in the previous month.

Demand for nonrevolving credit used to finance cars, vacations, education and others, meanwhile, plunged by 2.5 percent, compared with a 3.2 percent gain in September.

The central bank's report also showed that U.S. consumer credit in the July-to-September period had been revised to an increase of1.2 percent at an annual rate, down sharply from the second quarter's 3.9 percent growth pace.

Consumer credit reflects the situation of consumer spending, which accounts for two-thirds of overall U.S. economic activity and is a major force driving the economy.

Squeezed by rising job layoffs, falling home prices and a severe credit crunch, Americans cut their spending in the third quarter by 3.7 percent, the biggest quarterly drop since the second quarter of 1980.