By Vincent Del Giudice        Jul 8, 2010  

Consumer borrowing in the U.S. dropped in May more than forecast, a sign Americans are less willing to take on debt without an improvement in the labor market.

The $9.1 billion decrease followed a revised $14.9 billion slump in April that was initially estimated as a $1 billion increase, the Federal Reserve reported today in Washington. Economists projected a $2.3 billion drop in the May measure of credit card debt and non-revolving loans, according to a Bloomberg News survey of 34 economists.

Borrowing that’s increased twice since the end of 2008 shows consumer spending, which accounts for about 70 percent of the economy, will be restrained as Americans pay down debt. Banks also continue to restrict lending following the collapse of the housing market, Fed officials said after their policy meeting last month.

Economists’ projections in the Bloomberg survey ranged from a decrease of $5.2 billion to an increase of $2 billion in May. The central bank’s report doesn’t cover borrowing secured by real estate, such as home equity loans.

More at:    http://www.bloomberg.com/news/2010-07-08/consumer-credit-in-u-s-declined-by-more-than-forecast-9-1-billion-in-may.html