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

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

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

Revolving debt, such as credit cards, fell by $6.95 billion in October, according to the Fed's statistics.

Non-revolving debt, including auto and mobile-home loans, increased by $3.44 billion. The Fed's report doesn't cover borrowing secured by real estate.

Economists forecast consumer credit would drop by $9.4 billion in October, according to the median of 34 estimates in a Bloomberg News survey.

Projections ranged from declines of $4 billion to $15 billion. The Fed previously reported that consumer credit declined in September by $14.8 billion.

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.

Credit-card defaults may match a record reached earlier this year as more consumers fell behind on payments in October and unemployment surged above 10 percent, Fitch Ratings said Dec. 2.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.