- Consumer credit surged in December as shoppers boosted their credit-card debt for the first time in more than two years, supporting views economic activity was gathering momentum. Total credit outstanding climbed $6.1 billion, the Federal Reserve said on Monday, more than twice the $2.3 billion that Wall Street economists surveyed by Reuters had forecast.
- "It's encouraging that lenders are at least allowing credit card spending to go up, but also it's not great that the only way that extra consumption can be financed is through credit cards rather than hiring income," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.
- December marks the culmination of the Thanksgiving-through-Christmas shopping season when consumers are more likely to turn to their credit cards for purchases.
- December marked the third successive month in which consumer credit outstanding grew. It had risen by a steep $7.7 billion in October before the November and December gains. Prior to those three increases, consumer credit had contracted for 20 months in a row.
- Strikingly in December, revolving or credit-card debt climbed by $3.5 billion -- the first month in which this category of debt had risen since August 2008.
- Borrowing on auto loans increased 2.8 percent.
- Even with the December gains, consumer borrowing is just 0.7 percent higher than the more than three-year low hit in September. It is 6.6 percent below the high set in July 2008.
- Even if borrowing rises this year, many economists don't expect Americans will borrow at the pace seen in the middle of the last decade. During that period, soaring home prices made households feel wealthier than they were, and that encouraged them to borrow and spend more.