WASHINGTON, Oct. 7 (Xinhua) -- U.S. consumer credit dropped at an annual rate of 3.7 percent in August, the first decline since January 1998, the Federal Reserve reported Tuesday.
The 3.7 percent decline, or 7.88 billion dollars, followed a revised 2.4 percent growth rate in July and surprised analysts who had been expecting an increase of 5.25 billion dollars for August.
Consumer borrowing, which the Federal Reserve defines as all loans not secured by real estate, totaled 2.58 trillion dollars at an annual rate in August.
For August, consumer borrowing in revolving loans, a category that includes primarily credit card debt, fell by 0.8 percent at an annual rate, in contrast to an increase of 5.0 percent in the previous month.
Demand for nonrevolving credit used to finance cars, vacations, education and other things, meanwhile, plunged by 5.4 percent, compared with a 0.9 percent gain in July.
The central bank's report also showed that U.S. consumer credit in the April-to-June period had been revised to an increase of 4.1percent at an annual rate, down from the first quarter's 5.2 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 to grow.
Squeezed by rising job layoffs, falling home prices and a severe credit crunch, Americans are likely to cut their spending in the third quarter, analysts believe. That has not happened since 1991.
