WASHINGTON (AP) – Keeping a watchful eye on their debt, consumers cut back on their borrowing in November by the largest amount on record, the Federal Reserve reported Friday.

Consumer credit dropped by $8.7 billion in November from the previous month, marking the largest over-the-month decrease since the Fed began keeping records in 1943. The cutback represented a 5 percent decline at a seasonally adjusted annual rate.

The last time consumers trimmed their borrowing was in November 2003.

Economists, surprised by the magnitude of the cutback, cited a number of possible reasons for the more cautious approach to borrowing.

Consumers put off stocking up on holiday merchandise – which normally shows up on credit card bills – waiting instead for deeper discounts, economists said.

“I think consumers were waiting until retailers slashed prices on merchandise to bare bones, and that didn’t happen until late December,” said Richard Yamarone, economist at Argus Research.

Some consumers may have opted to pay off some debts that mounted over the summer, which also could have contributed to a decline in borrowing, some analysts said. The lingering toll of high energy costs and a still-recovering job market also may have curbed some consumers’ appetite to take on more debt, economists said.

The Fed’s report includes credit card debt and loans for such things as boat, cars and mobile homes. It does not include real-estate loans, such as home mortgages or popular home-equity loans.

Some analysts noted that the consumer credit figure can swing widely from month to month, and they cautioned against reading too much into the steep one-month drop. Still, they said the credit figures bear watching and may raise questions about consumers’ appetite for spending in the months ahead.

Consumer spending accounts for roughly two-thirds of all economic activity in the United States.

The borrowing pullback in November was led by a decline in revolving credit, which is mostly credit cards.

Demand for revolving credit plunged in November from the previous month at a 11 percent annual rate or by $7.2 billion – the largest drop since the Fed began keeping records on this type of credit in 1968. That compared with a $2.4 billion increase in revolving credit in October, or a 3.7 percent growth rate.

Demand for nonrevolving credit, which includes loans for cars, vacations and education, also fell in November at a 1.3 percent annual rate, or by $1.4 billion. In October, such borrowing rose by a brisk 6.6 percent, or by $7.1 billion.

AP-ES-01-07-05 1638EST

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