Washington: Americans borrowed less for a 10th consecutive month in Nov-ember with total credit and borrowing on credit cards falling by the largest amounts on records going back nearly seven decades.
The dramatic declines raised new worries about whether consumers will cut back further on spending, making it harder for the US economy to mount a sustained rebound.
The Federal Reserve said on Friday that total borrowing dropped by $17.5 billion (Dh64.23 billion) in November, a much bigger decline than the $5 billion decrease economists had expected.
Americans are borrowing less for a number of reasons. They remain fearful about their job prospects and they are also trying to replenish depleted investments.
Saving too much
Even consumers who would like to increase their borrowing are finding it hard to get credit at banks. Many banks, hit by the worst financial crisis since the 1930s, have tightened lending standards. While economists have worried for years about the low rate of US savings, the concern now is that consumers could derail the recovery if they start saving too much of their incomes. Consumer spending accounts for 70 per cent of total economic activity.
"With consumers facing difficult labour market conditions and tight credit conditions, downward pressures on credit are likely to remain strong and improvements will be very gradual," Gregory Daco, an economist at IHS Global Insight, wrote in a research note.
November's $17.5 billion drop in total credit was the biggest amount in dollar terms since records began in 1943. That represents an 8.5 per cent fall from the October borrowing level.
