U.S. Consumer Credit Falls Again in December; November Revised Lower

With banks freezing credit lines and the economy tanking, consumer credit in the U.S. declined in December 3.1 percent for the third straight month. It’s the longest slide in consumer since 1991.

The Federal Reserve reported late Friday that overall consumer credit outstanding in the U.S. dropped by $6.6 billion in December, or at an annualized rate of 3.1 percent. The Fed’s consumer credit report, called the G.19, does not include debt backed by real estate.

The decline was larger than expected as analysts polled by Reuters forecast a $3 billion drop in consumer borrowing for December.

In November, the Fed upwardly revised the credit contraction to a negative 5.1 percent, or $11 billion. It marks the largest monthly contraction in consumer credit since 1943.

Most of the decline was in revolving credit, most commonly comprised of credit card debt. Revolving credit fell $6.32 billion, or 7.8 percent, to a total of $963.55 billion outstanding in December. In November, revolving credit declined 8.5 percent.

Non-revolving credit — which includes loans for cars, boats, and education — fell $287 million, or at a 0.2 percent rate in December after declining 3.1 percent in November.

In the fourth quarter of 2008, total consumer credit in the U.S. contracted at an annual rate of 3.1 percent, with revolving credit declining 5.4 percent and non-revolving credit sliding 1.7 percent.

Total consumer credit outstanding in the U.S. stood at $2.563 trillion at the end of 2008.