US consumer credit dropped at an annual rate of 3.1 percent in December 2008, the third straight monthly decline, the Federal Reserve reported on Friday.

The three consecutive months of declines was the longest stretch of weakness in US consumer credit since a seven-month plunge that ended in December 1991.

In dollar terms, consumer credit fell by 6.6 billion dollars at an annual rate in December, nearly double what analysts expected. The more-than-expected decline followed an 11-billion-dollar drop in November that was the biggest monthly plunge on records going back to 1943.

The December drop left total consumer borrowing, which the Federal Reserve defines as all loans not secured by real estate, at an annual rate of 2.56 trillion dollars at the end of the month.

For December, consumer borrowing in revolving loans, a category that includes primarily credit card debt, declined by 7.8 percent at an annual rate. Borrowing in this category dropped 8.5 percent in November.

Demand for nonrevolving credit used to finance cars, vacations, education and other things, meanwhile, edged down 0.2 percent, compared with a bigger 3.1 percent decline in November.

Consumer credit reflects the situation of consumer spending, which accounts for two-thirds of overall US economic activity and is a major force driving the economy to grow.

Squeezed by rising job layoffs, falling home prices and a severe credit crunch, Americans cut their spending in the fourth quarter by 3.5 percent, the second straight quarterly drop. That was the first back-to-back declines since the 1990-91 recession.

Consumer borrowing is unlikely to rebound anytime soon as the recession is deepening and job layoffs are rising, economists believe.

(Xinhua News Agency February 7, 2009)