According to a new report from the Federal Reserve, consumer borrowing in the US increased in November by $12.32 billion. The largest portion of this rise came from non-revolving credit, which mostly includes auto and student loans. Non-revolving credit climbed to $11.9 billion, while revolving credit, such as credit cards, increased by only $458 million. This advance follows a $17.9 billion rise in October, so it was a slower pace than many analysts expected. Economists had estimated that total consumer credit would rise by $14.3 billion, instead of just $12.3 billion.
However, the increase in non-revolving credit does show that credit conditions are improving in the United States. According to Nariman Behravesh, chief economist at IHS Inc., “We are seeing consumers beginning to take on more debt, and that’s part of the recovery.” Increases in consumer credit indicate that the improving job market and rising household incomes are giving consumers the confidence to borrow. Consumers that are willing to spend and borrow within their means prompts economic growth, so the increase in consumer debt is good for the US economy. Analysts expect total consumer credit to continue rising in the coming months, especially for revolving credit, as the economy continues to recover.
Source: Bloomberg News
