United States consumer credit plunged by $21.6 billion from June to July, as per fresh statistics released by the Federal Reserve Bank, signifying soaring rate of unemployment plus ailing economy. 

It was the highest dollar-value fall since 1943, the year in which records began. Experts had projected credit to fall by $4 billion.

Consumer credit plunged at an annualized rate of 10.4 per cent. It was the largest fall since a 16.3 percent drop in June 1975. Consumer revolving credit dropped $6.1 billion in July.

Drop in consumer spending may be good news on personal level but it may trouble US in the long run as country’s economy depends 70 per cent on consumer spending.

Economist Mark Zandi, said, “Credit is the mother's milk of economic activity, and until it flows more freely, the economy will struggle.”

Consumer credit dropped as consumers resorted to save more and spend less to cope with the economic slump. 

It may be noted here that rate of unemployment in US has reached 9.7 per cent, highest in the past 26 years.