Thursday, July 8, 2010

Households Continue to Reduce Borrowing in May

The Federal Reserve reported that consumer credit decreased at an annual rate of 4.5% in May 2010. The decline reflects decreased borrowings from households whose balance sheets are still suffering from the worst financial and economic strain since the Great Depression.

Revolving credit decreased at an annual rate of 10.5% in May. This is the 20th straight monthly decline. From a year ago, revolving credit was down 9.4% and down 14.9% from its peak in September 2008. Seeking greater financial stability, households have reduced revolving credit borrowings.

Nonrevolving credit decreased as well, falling an annual rate of 1.4% in May. Nonrevolving credit has fallen three consecutive months after increases in December, January, and February.

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