Fed says people paying bills instead of spending

Consumers cut back on borrowing and reduced their outstanding debts by $324 million in October, the first such debt reduction since last December, the Federal Reserve Board said.

The debt trimming means consumers' balance sheets are in better shape, but it bodes ill for the economy, because economists have been counting on increased consumer spending to lift the nation out of recession. The October data suggest that consumers were more interested in paying off old debts before taking out loans to finance new purchases.