Nov. 6 (Bloomberg) -- U.S. consumer credit fell in September for an eighth straight month, the longest series of declines on record, as thousands of Americans lost their jobs and banks tightened access to loans.

Borrowing fell more than economists predicted, declining by $14.8 billion, or 7.2 percent at an annual rate, to $2.46 trillion, according to a Federal Reserve report released today in Washington. Credit dropped by $9.86 billion in August, less than previously estimated. The consecutive declines were the most since records began in 1943.

A labor market that kept losing jobs in October threatens to limit consumer spending, which accounts for about 70 percent of the world’s largest economy. More than 100 banks have failed this year, and lenders are requiring tougher conditions for the credit they extend to consumers and businesses.

“This is truly an ugly report in what it portends for consumer spending,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “If consumers are indeed the key to recovery, this economic expansion from the recession could be the weakest and most jobless one yet.”

Economists had forecast consumer credit would drop by $10 billion in September, according to the median of 33 estimates in a Bloomberg News survey. Projections ranged from declines of $4 billion to $21 billion. The Fed initially reported that consumer credit declined in August by $12 billion.

Credit Cards

Revolving debt, such as credit cards, declined by $9.93 billion in September, according to the Fed’s statistics. Non- revolving debt, including loans for autos and mobile home, dropped by $4.87 billion. The Fed’s report doesn’t cover borrowing secured by real estate.

A Labor Department report earlier today showed unemployment rose in October to a 26-year high of 10.2 percent, from 9.8 percent a month earlier. Employers cut payrolls by 190,000, more than economists predicted.

Consumer spending in September declined for the first time in five months, according to Commerce Department statistics released Oct. 30. Jobs losses, stagnant incomes and the expiration of stimulus programs may restrain spending.

In the auto industry, General Motors Co., Toyota Motor Corp. and Ford Motor Co. said sales fell in September as demand waned after the “cash for clunkers” rebates cut industry deliveries to the second-slowest rate this year, according to industry statistics released on Oct. 1.

Household finances have been on the mend this year. Net worth rose by $2 trillion in the second quarter to $53.1 trillion, bringing an end to the biggest slump on record, according to Fed statistics released Sept. 17. The increase was the first gain since the third quarter of 2007. Additionally, credit-card defaults fell in September from a record high, Moody’s Investors Service reported on Oct. 22.

To contact the reporter on this story: Vincent Del Giudice in Washington vdelgiudice@bloomberg.net

Last Updated: November 6, 2009 15:46 EST