Consumer credit fell by $3.2B in May
WASHINGTON - Consumers trimmed borrowing in May for the fourth straight month as the recession took another bite out of investments and drove unemployment higher.
Many economists predict that consumers will stay cautious in the months ahead, boding for a lethargic recovery if the downturn ends later this year as many expect.
The Federal Reserve said yesterday that consumer credit fell at an annual rate of 1.5 percent, or by $3.2 billion, from April. Economists expected a deeper cut of $9.5 billion.
But the new figures still mark the latest move by consumers to curb borrowing, pay down debt, and strengthen household budgets. Americans have been spending less and saving more to cope with the recession, which started in December 2007 and is the longest since World War II.
The savings rate jumped to 6.9 percent in May, the highest since December 1993. The amount of money saved, $768.8 billion, was the most on records that started in January 1959, the government recently reported.
Revised data released yesterday showed consumers ratcheted back borrowing at a 7.8 percent pace in April, or by $16.5 billion. That was a bigger cut than first reported and the largest - in dollar terms - on records dating to 1943. The $15.6 billion drop in March was slightly less than previously reported, but the second largest tally ever.
