New figures from the Federal Reserve reveal that for the third month in a row, Americans sought to avoid accumulating additional credit card debt by curbing their spending.
Consumer borrowing decreased by $6.6 billion in December. Spending fell by 3.1 percent during the month, which was approximately double what analysts had been predicting.
Credit card debt in particular showed a steep decline of 7.8 percent, while non-revolving debt – including student and car loans – fell by 0.2 percent.
Although December’s fall may not bode well for the retail sector, it is not as severe as December’s decline of 5.1 percent, which was the largest decrease recorded since 1943.
Employment worries continue to be one of the most significant factors that lead consumers to cut back on spending.
Last week, the Labor Department said that nearly 600,000 positions had been eliminated by U.S. companies during January. Meanwhile, many employers have been refraining from filling existing positions until economic indicators take a more positive turn.
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