by Patrick Lunsford, CollectionIndustry.com
The Federal Reserve said Tuesday that September saw the largest drop in consumer borrowing in more than 14 years, led by a huge drop in auto and boat loans. But credit card borrowing increased by a substantial amount in the month.
Officially, the total drop in consumer credit was $1.2 billion. The last time such a large drop was registered was April 1992, when total consumer borrowing dropped by $1.8 billion.
Many on Wall Street were surprised by the drop. Analysts polled by MarketWatch were expecting consumer credit to increase in September by about $5.4 billion.
Despite the overall drop, revolving credit — like credit card loans — increased by $2.85 billion, an annual rate of 4.00%, to come in at $857 billion total outstanding. Non-revolving loans ? such as auto loans ? fell $4.05 billion in September.
The figures released by the Fed do not include mortgages and other real property-backed loans.
Although the drop in total consumer credit was large and shocking, there is a good chance the numbers could be amended next month. Case in point: in September?s report, the Fed adjusted Augusts? total consumer borrowing increase to a huge $9.13 billion, up from the initial estimate of $4.99 billion.
