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Banking

Consumer Credit Up Sharply in Late 2011

photo of credit cardConsumer credit outstanding grew late last year, according to data released by the Federal Reserve in January. In November 2011, consumer credit increased at a 10 percent annual rate, or $20.4 billion, buoyed primarily by an increase in student and credit card loans.

Revolving credit, mostly made up of credit card debt, grew an annualized 8.5 percent in November—the third consecutive monthly increase in that category. Meanwhile, nonrevolving credit, which includes auto and student loans, jumped $14.8 billion, or 10.7 percent. A hefty share of the increase in revolving credit was in the government loan category, mostly composed of student debt. Credit outstanding in that category grew $6.4 billion from the previous month. In the 12 months to November, government loans increased more than any other type of nonrevolving loan tracked by the Fed.

The surge in consumer credit comes as banks report easing lending standards on some loans to consumers. According to the Federal Reserve's third quarter Senior Loan Officer Opinion Survey, banks reported easing standards on consumer credit card and auto loans. Federal Reserve Governor Elizabeth Duke referenced the survey in a January 6, 2012, speech, noting that recent easing in the consumer credit market is encouraging as it suggests that "when households do regain confidence in the recovery and are ready to begin spending on consumer goods again, the credit markets will not be as much of a constraint as they were during the recession."

January 31, 2012

 

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