WASHINGTON – Consumer borrowing fell in October by the largest amount in 14 years, reflecting a big drop in auto loans.
The Federal Reserve reported Thursday that borrowing declined at an annual rate of 0.6 percent in October following a revised 2 percent increase in September. It was the biggest drop since a 1 percent plunge in October 1992.
The weakness last month came from a huge falloff in demand for auto loans and other types of non-revolving credit, which declined at a rate of 3.3 percent in October, following a small 0.4 percent gain in September.
The drop in the category that includes auto loans was the largest one-month decline in this area since a 3.6 percent fall in May 1993.
The 0.6 percent overall drop was the first dip in consumer borrowing since a smaller 0.2 percent decrease back in March.
The overall economy has slowed significantly this year as consumers have trimmed the growth in their spending and the housing market has been battered by slowing sales and weaker home prices.
The Fed report showed that the category that includes credit cards saw an increase in borrowing of 4.1 percent at an annual rate in October, down from a 4.9 percent rise in September.
The overall drop in borrowing trimmed $1.24 billion from total consumer credit outstanding in October, pushing it down to $2.38 trillion.