Borrowing by consumers fell by $15.7 billion in April as U.S. households continued to trim spending and put away their credit cards amid a severe recession.
The Federal Reserve said Friday the April decline was the second largest ever in dollar terms following March's drop of $16.6 billion. March's decline originally was reported as $11.1 billion, which had been the most on records dating to 1943.
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The April decline was more than double the $6 billion drop that economists had expected. Analysts believe consumers will remain cautious as long as the unemployment rate keeps rising, which it did again in May.
In percentage terms, consumer credit fell at an annual rate of 7.4 percent in April, following a 7.8 percent drop in March. The two declines were the largest since an 8.1 percent drop in December 1990.
Households have been spending less and saving more as they try to replenish their nest eggs in the face of huge declines in home values and investment holdings.
Americans' personal savings rate jumped to 5.7 percent in April, the highest since February 1995, according to government data released earlier this week. The level of savings — $620.2 billion — was the most on records dating to January 1959.
The category in Friday's report that includes credit card debt dropped at an annual rate of 11 percent in April, following an 11.2 percent plunge in March.
Auto loans and other non-revolving credit fell at an annual rate of 5.3 percent, following a 5.8 percent decline in March.
In a separate report, the government said the jobless rate jumped to a 25-year high of 9.4 percent in May as employers cut a net total of 345,000 jobs.
The payroll job loss was the smallest since September and a sign that the recession, already the longest since World War II, could be starting to bottom out. Some economists believe the economy may be close to resuming growth although they expect the expansion will be weak to start, given all the problems facing the financial sector and the housing industry.
The $15.7 billion drop in consumer borrowing in April left total consumer credit at $2.52 trillion. The Fed's measure of consumer credit does not include home mortgages or other loans secured by real estate.