Consumers trim debt for 5th straight month

updated 3:07 p.m. ET Aug. 7, 2009

WASHINGTON - The Federal Reserve says consumers paid down their credit cards and reduced other debt in June for the fifth straight month as they rebuild savings battered by the recession.

The Fed says Americans cut their outstanding consumer debt by $10.3 billion, or 4.9 percent, to $2.5 trillion in June.

The cut is much steeper than the $4.7 billion analysts expected and larger than the $5.4 billion drop in May.

Rising unemployment, declining home values and reduced stock portfolios have spurred Americans to spend less and save more.

That could slow any economic recovery, as consumer spending accounts for 70 percent of economic activity.

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