Ahead Of The Bell: Consumer Credit

WASHINGTON (AP) — Consumers likely reduced their borrowing for an eighth straight month in September, as layoffs continue and credit remains tight. The declines in borrowing are expected to drag on the fledgling economic recovery.

Economists surveyed by Thomson Reuters expect consumer credit fell by $10 billion at an annual rate in September after a decline of $12 billion in August. The Federal Reserve will release the report at 3 p.m. EST Friday.

Americans are borrowing less as they try to repair cracked nest eggs and replenish rainy day funds in the face of rising unemployment. Many are finding it hard to get credit as banks, hit by the worst financial crisis in decades, have tightened lending standards.

While economists have worried for years about the low rate of U.S. savings, the concern is that consumers could derail the fledgling recovery if they begin saving too great a share of their incomes. Consumer spending accounts for 70 percent of total economic activity.

For August, the Fed reported that total consumer debt outstanding fell by $12 billion, a 5.8 percent annual rate. That followed a $19 billion decline in July, which had been the largest in dollar terms on records dating to 1943. It was a 9.1 percent decline, the largest such drop since a 16.3 percent fall in June 1975.