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Business

Record plunge in consumer credit

Text by NEWS WIRES

Latest update : 2009-09-09

US consumer credit posted a record plunge in July, the sixth month of decline, and fell at an annualized rate of 10.4 percent, according to the Federal Reserve. But a lack of spending risk further damaging an economy significantly driven by output.

AFP - US consumer credit posted a record plunge in July, the sixth monthly decline, as Americans bridled spending amid rising unemployment and an ailing economy, Federal Reserve bank data showed Tuesday.
   
Outstanding consumer credit fell by a seasonally adjusted 21.5 billion dollars in July from June, the highest dollar-value decline since tracking of the data began in 1943.
   
Consumer credit fell at an annualized rate of 10.4 percent, the largest drop since a 16.3 percent decline in June 1975.
   
The July plunge far eclipsed the average analyst forecast of a 4.0-billion-dollar drop.
   
Consumers have hunkered down amid the long recession, saving more and spending less to cope with the downturn. But that trend could crimp the nascent recovery of the world's largest economy, where consumer spending drives two-thirds of output.
   
The last time there were six or more months of decline in consumer credit was in June-December 1991, during a recession.
   
 

Date created : 2009-09-09

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