Consumer credit falls for eighth month

Borrowing fell more than economists predicted, declining by $14.8 billion, or 7.2 percent at an annual rate, to $2.46 trillion, according to a Federal Reserve report released yesterday in Washington. Credit dropped by $9.86 billion in August, less than previously estimated. The consecutive declines were the most since records began in 1943.

A labor market that kept losing jobs in October threatens to limit consumer spending, which accounts for about 70 percent of the world’s largest economy. More than 100 banks have failed this year, and lenders are requiring tougher conditions for the credit they extend to consumers and businesses.

“This is truly an ugly report in what it portends for consumer spending,’’ said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.

“If consumers are indeed the key to recovery, this economic expansion from the recession could be the weakest and most jobless one yet.’’

Economists had forecast consumer credit would drop by $10 billion in September, according to the median of 33 estimates in a Bloomberg News survey. Projections ranged from declines of $4 billion to $21 billion. The Fed initially reported that consumer credit declined in August by $12 billion.

Revolving debt, such as credit cards, declined by $9.93 billion in September, according to the Fed’s statistics. Nonrevolving debt, including loans for autos and mobile homes, dropped by $4.87 billion. The Fed’s report doesn’t cover borrowing secured by real estate.

Household finances have been on the mend this year. Net worth rose by $2 trillion in the second quarter to $53.1 trillion, according to Fed statistics released Sept. 17. The increase was the first gain since the third quarter of 2007.

Additionally, credit-card defaults fell in September from a record high, Moody’s Investors Service reported on Oct. 22.