Consumer Credit Fell Again in January --- Decline at 4% Annual Rate Signals Buyers Slowed Spending as War Began
WASHINGTON -- Consumer credit fell at a 4% annual rate in January, the Federal Reserve reported, marking the second straight monthly decline and clearly signaling that consumers were putting the brakes on spending as the Persian Gulf war began.</br></br>"It's extremely unusual to get two declines in a row," said Robert McGee, an economist at Tokai Bank in New York. "There's only one way to interpret it: The economy was very weak."</br></br>The drops in credit extended to consumers in December and January were the first consecutive declines since the three straight drops from December 1986 to February 1987. The decline this past January, which put consumer credit outstanding at $736.6 billion, was the biggest drop since the contraction at a 5% rate in February 1987.</br></br>However, the Fed revised its previous report to show that consumer credit in December fell at a 0.6% rate, not at the 2.3% rate originally reported.</br></br>The revision for December also meant credit growth for all of 1990 was 3.1%, slightly higher than the 3% reported last month. That compared with growth of 7.8% in 1989 and 8.9% in 1988.