Consumer credit in the U.S. declined less than forecast in October, a sign the financial crisis is easing and households are gaining confidence that the economic expansion will take hold.

Credit fell by $3.51 billion, or 1.7% at an annual rate, to $2.48 trillion, according to a Federal Reserve report released Monday. Borrowing dropped by $8.77 billion in September, less than previously estimated.

The worst recession since the 1930s eased at midyear with the help of government spending programs. The recovery will get more of a lift from consumer purchases, which account for about 70% of the economy, as the labor market improves.

"It's reflective of improved consumer activity, clearly more so with vehicle sales," said Maxwell Clarke, chief U.S. economist at IDEAglobal in New York, which has forecast a $4 billion drop, the smallest in a Bloomberg survey. "The concern is for revolving credit, where banks are pulling lines of credit."

Revolving debt, such as credit cards, fell by $6.95 billion in October, according to the Fed's statistics. Nonrevolving debt, including auto and mobile-home loans, increased by $3.44 billion. The Fed's report does not cover borrowing secured by real estate.

The median of 34 estimates from economists surveyed by Bloomberg News survey called for a $9.4 billion decline in consumer credit. Consumer credit declined in September by $14.8 billion, according to Fed reports.

Consumer credit peaked at $2.6 trillion in July 2008, and fell as the recession deepened. Credit has declined for nine straight months, the longest stretch on record.

The economy has lost 7.2 million jobs since the recession started in December 2007, and the unemployment rate for October reached 10.2%, the highest since 1983. Labor Department data released last week showed the jobless rate fell to 10% as employers shed 11,000 workers, the fewest since the recession began.

However, Fed Chairman Ben Bernanke said Monday that "despite the general improvement in financial conditions, credit remains tight for many borrowers," and the job market "remains weak."

"We still have some way to go before we can be assured that the recovery will be self-sustaining," Bernanke said in a speech to the Economic Club of Washington. "My best guess at this point is that we will continue to see modest economic growth next year — sufficient to bring down the unemployment rate, but at a pace slower than we would like."

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