The Federal Reserve said Monday that consumer borrowing fell in November for a second straight month, the first time that has occurred in more than 13 years.
Borrowing declined at an annual rate of $648.8 million, to $2.16 trillion, following a record rate of decline of $8.4 billion in October. It was the first consecutive decline since May-June 1992.
The weakness in November caught analysts by surprise. They had been expecting a rebound in borrowing based on the fact that consumer spending and consumer confidence both revived in November, reflecting a drop in gasoline prices.
Expressed in percentage terms, consumer credit edged down at an annual rate of 0.4 percent in November after having fallen 4.7 percent in October.
Consumer credit posted sizable gains of more than 6 percent in July and August, reflecting a surge in auto sales. In September, consumer credit rose at an annual rate of 2.8 percent.
By category, credit card debt and other revolving loans edged up a slight 0.5 percent in November at an annual rate after having fallen 2.8 percent in October.
Non-revolving debt, which includes auto loans, fell for a third consecutive month, dropping 0.9 percent after declines of 5.8 percent in October and 0.3 percent in September.
Many consumers have tapped the rising value of their homes rather than taking on more credit card debt to boost spending and the economy.
Slumping car sales and post-hurricane surges in energy prices slowed consumer spending growth by about half in the fourth quarter. That may be softened by job creation that ended the year at its second-strongest pace since 1999.
“This downturn in consumer credit mirrors the sharpest quarterly pullback in consumer spending in the fourth quarter since the 2001 recession,” said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi Ltd. in New York. Still, “with the economy creating over 2 million new jobs per year, we expect consumer spending and credit to recover in the first quarter of this year,” he said.
Since February 2001, when borrowing was up 11.8 percent from the same month a year earlier, consumer credit has slowed.
November borrowing was up 3 percent from the same month in 2004.
