Posted on 01/09/2006 2:32:02 PM PST by Toddsterpatriot
WASHINGTON - Consumer borrowing fell in November for a second straight month, the first time that has occurred in more than 13 years.
The Federal Reserve reported Monday that borrowing declined at an annual rate of $648.8 million in November following a record rate of decline of $8.4 billion in October.
The weakness in November caught analysts by surprise. They had been expecting a rebound in borrowing based on the fact that consumer spending and consumer confidence both revived in November, reflecting a drop in gasoline prices.
The $8.4 billion rate of decline in borrowing in October was a record for a single month and reflected a sharp drop in auto sales, which had soared during the summer as automakers offered attractive sales incentives.
Expressed in percentage terms, consumer credit edged down at an annual rate of 0.4 percent in November after having fallen at a 4.7 percent rate in October.
Analysts said the slowdown in borrowing reflected the weaker auto sales and also a greater reliance by consumers on home equity loans, which are not measured in the Fed statistics.
"People are still using the equity in their homes to finance spending," said Mark Zandi, chief economist at Moody's Economy.com. "It is much cheaper to borrow against your home than to use your credit cards."
On Wall Street, the Dow Jones industrial average closed above 11,000 for the first time since before the Sept. 11, 2001, terrorist attacks as investors enjoyed a five-day rally that has sent stocks soaring in the New Year. The Dow rose 52.59 points Monday to close at 11,011.90.
Consumer credit posted sizable gains in July and August above 6 percent, reflecting the surge in auto sales. In September, consumer credit had risen at an annual rate of 2.8 percent.
By category, credit card debt and other revolving loans edged up a slight 0.5 percent in November at an annual rate after having fallen by 2.8 percent in October.
Non-revolving debt, the category that includes auto loans, fell for a third consecutive month, dropping 0.9 percent after having declined 5.8 percent in October and 0.3 percent in September.
The decline in overall borrowing pushed consumer debt in the categories tracked by the Fed down to $2.156 trillion in November, slightly below the all-time high of $2.165 trillion set in September.
that's interesting, given the fact we just went through the holidays....
I DO know that I outright avoided using the plastic money in my wallet as much as I could.
October and November. December is probably up.
you know, I missed that :)
oops :)
They call them consumers, but they are victims of the commerce industry.
There's nothing left to borrow against for the people most likely to borrow.
Right! If consumer borrowing goes down, it is bad news and if it goes up, it is still bad news.
I agree. I went into Best Buy and was taken hostage until I bought a big screen TV. It was awful. I'll have to watch the 24 premiere just to recover. LOL!!!
You should see the lone bozo, on the THE DOW BROKE 11,000 TODAY THREAD! He's a real "classic" case. hehehehehehehehe
well, interest rates have been raised several times last year - it's almost like a no brainer.
Oh yes, of course, I was dragged, kicking and screaming, into Saks and threatened with the death of my first born, if I didn't buy at least one outfit, a pair of shoes, and a matching pocketbook. LOL
I admit some of these confuse me, so please correct me: If there i sa dip in consumer borrowing, doesn't this mean that fewer people are taking out loans? And if so, wouldn't that indicate that either the interest rates for such loans are too high to afford, or that they (consumers) are busy paying off their personal debts?
They have grown subtle. Most victims have no idea they have been victimized even after they get the credit card bill.
Did the same thing last month. I'm paying off the cards this week, and setting them on fire. Never again!
Outstanding loans dropped. People paid off loans and did not borrow more.
Corporates rebuilt their balance sheets in 2001-2004, now households are strengthening theirs. This is positive in the intermediate and long term.
Don't tell Willie Green.
If your mailbox is like mine, you can't find your mail through all of the credit card acceptance notices. Believe me, there is plenty of credit to go around.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.