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Economic Report: U.S. consumer credit keeps expanding at strong rate in November


The numbers: Total consumer credit rose by $28 billion in November, down only slightly from the $29.1 billion gain in the prior month, the Federal Reserve said Monday. That translates into a 7.1% annual rate, down from a revised 7.4% gain in the prior month.

Economists had been expecting a $26 billion gain, according to the Wall Street Journal forecast.

Key details: Revolving credit, like credit cards, rose 16.9% in November after a 10.3% gain in the prior month.

Nonrevolving credit, typically auto and student loans, rose 3.9%, down from a 6.5% growth rate in the prior month. This category of credit is much less volatile. 

The Fed’s data does not include mortgage loans, which is the largest category of household debt.

Big picture: Consumer credit has been growing consistently between $24 billion and $30 billion per month for the past seven months. While some households are borrowing more to withstand inflationary pressures, economists see the growth as mainly a sign of strength in the economy.

“As we take a temperature check of the American consumer, we find they have proven resilient throughout 2022,” said David Tinsley, senior economist for Bank of America Institute, a think tank on banking and financial-market issues.

“While 2023 is likely to be more challenging, especially if the labor market deteriorates, consumers are starting the year in good overall financial health,” Tinsley said, in a report released last month.

Looking ahead: “The data suggest that consumers are relying more on borrowing to finance consumption in the face of high inflation and dwindling savings. Households’ ability to borrow — particularly lower-income households — isn’t unlimited, however, and would only become more constrained if lenders tighten standards as the economy slows as expected,” said Nancy Van Houten, economist at Oxford Economics.

Market reaction: Stocks


closed lower Monday after strong gains at the open on worries about Fed hawkishness. The yield of the 10-year Treasury note

was down slightly to 3.53%.

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