Consumer Credit Drops $3.5 billion in October

Consumer credit outstanding in the U.S. contracted by a total of $3.5 billion in October, according to the Federal Reserve. Both revolving and non-revolving debt slid in the month.

The Fed said late Friday that the drop equated to a 1.6 percent annualized contraction. Consumer credit increased 3.1 percent in September after falling 3 percent in August.

Analysts had expected a modest increase in consumer credit for October.

Revolving debt, most commonly credit card balances, fell $182 million in the month, or at an annual rate of 0.2 percent. Non-revolving debt – such as auto, student and personal loans – fell by $3.4 billion, a 2.5 percent annual rate.

The Fed’s monthly consumer credit report, called the G.19, does not cover real estate loans.

The report confirmed a pullback by American consumers in the wake of the recession. Although the recession was not officially declared during the report month, the precipitous slide in the stock market took place during the month of October.

“Consumers are fearful of the economic outlook, particularly the jobs climate, and they have turned off the spending spigots,” Richard Yamarone, director of economic research at Argus Research, told Bloomberg.