WASHINGTON (AP) -- Consumer borrowing fell again in July as households cut back on their credit card use for a 23rd consecutive month, adding more drag on an economy struggling to mount a sustained rebound.

Borrowing dropped at an annual rate of $3.6 billion in July, the Federal Reserve reported Wednesday. That marked the 17th drop in credit in the past 18 months.

Americans did boost borrowing for auto loans in July but this gain was offset by further reductions in the category that includes credit cards.

The latest drop in overall borrowing was slightly higher than economists' expectations and followed a $1.02 billion decline in June, which was revised from an initial estimate that total credit had dropped by $1.3 billion that month.

Analysts said that consumer credit is continuing to be constrained by all the problems facing households including tighter lending standards on the part of banks struggling with high loan losses.

"On the demand side, households continue to show signs of caution as they face high unemployment, minimal wage increases and poor housing conditions," said Gregory Daco, senior U.S. economist at IHS Global Insight. "On the supply side, tight lending remains the norm."

The July decrease represented a 1.8 percent decline in percentage terms and followed a 0.5 percent drop in June. The only increase in credit that has occurred since January 2009 was a small 1 percent rise in January of this year.

Borrowing in the category that includes auto loans rose 0.6 percent in July after gains of 3.2 percent in June and 1.2 percent in May. The three monthly increases reflected a revival of auto sales this summer after automakers endured slumping sales during the recession.

Borrowing on credit cards fell by 6.3 percent in July after a bigger 7.5 percent June decline. This category has now fallen for a record 23 consecutive months as Americans have struggled to repair their household finances after the worst recession since the 1930s.

Households are borrowing less and saving more and that has acted as a drag on the overall economy by lowering consumer spending, which accounts for 70 percent of total economic activity.

Economists expect households will continue to cut back on borrowing as long as incomes and employment don't show significant improvements.

The government reported Friday that the unemployment rate in August climbed to 9.6 percent in August, up from 9.5 percent in July as payroll jobs fell by 54,000. The jobless rate has shown scant improvement after hitting a high for this downturn of 10.1 percent last October.

The long stretch of declining borrowing has left total consumer credit at an annual level of $2.42 trillion, 6.3 percent below the peak set in July 2008 of $2.58 trillion in credit.

The Fed's credit report covers credit card debt, auto loans and other debt not secured by real estate. It does not cover home mortgages or home equity lines of credit.