In a separate report, the Fed said outstanding balances of consumer borrowing, which includes car and credit-card loans among other forms of installment debt, fell $4 billion overall, or by an annual rate of 2.75%, to $1.722 trillion in December.
The last time Americans cut their debt at a faster annual pace was in April 1992, when consumer credit declined by 3%, the Fed said. In dollar terms, the drop was the biggest since a $5.825 billion slide in December 1990.
Economists were way off. They had predicted credit would increase by $4.3 billion in December, according to a survey by Thomson Global Markets.
Tallies for borrowing in November were revised sharply to a slide of only $100 million, compared with initial estimates of a $2.2 billion drop. Monthly credit data tend to be highly volatile and are frequently revised.
Still, the drops in November and December mark the first back-to-back declines in consumer credit since May and June of 1992, when the economy was still shaking off the effects of recession, the Fed said.
The big drop in December came from revolving credit, such as credit cards. That type of outstanding borrowing shrank by $8.4 billion, or a 14% annual rate -- its fastest decline since December 1975.
Nonrevolving credit, such as loans for cars, education and vacations, actually climbed in December by $4.4 billion.
For all of 2002, consumer-credit outstanding rose by 3.3%, the smallest increase since 1992. It was down at a 0.1% annual pace in the third quarter. In annualized terms, consumer credit fell at a 2.8% rate in December.
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25% annually 70% in 5 years.
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