November: Largest Consumer Credit Growth in a Decade

Consumer credit outstanding surged at an annual rate of 10 percent in November, according to data released Monday by the Federal Reserve. Credit card debt grew by 8.5 percent in the month, the largest gain in more than three years.

The overall growth in consumer credit in November stunned analysts and was even high enough to lift the mood on Wall Street in late trading Monday. The $20.4 billion that consumers borrowed in November was the most since November 2001, when consumers borrowed $28 billion after banks drastically altered lending practices in the wake of the September 11 attacks.

Most of the gain was attributed to non-revolving credit, specifically student and auto loans. The non-revolving credit category, which also includes personal and other loans with set monthly payments, saw an increase of $14.8 billion in November, or an annualized increase of 10.7 percent.

Revolving credit, principally comprised of credit card debt, grew by $5.6 billion in the month, or at an annual rate of 8.5 percent. The increase in credit card debt was the largest since February 2008.

November also marked the third straight month of increases in total consumer credit card debt outstanding, the first such streak since the beginning of the financial crisis. Peaking at $972.2 billion in September 2008, credit card debt had steadily fallen for the past three years, recovering only in the second half of 2011.

There was a note of caution regarding the readings Monday. The U.S. Department of Commerce reported in late December that consumer spending grew only 0.2 percent in November, while income grew just 0.1 percent. So while the consumer credit numbers reflect a huge increase in spending, only a small percentage is shown in the Commerce reporting, leading some to wonder if consumers are being forced to spend on credit rather than with saved cash or increasing wages.