Here's another sign that the economy is expanding, maybe even much faster than anticipated: The Federal Reserve announced yesterday that consumer credit expanded by $19 billion in December, as Americans once again felt comfortable borrowing money. To show what a surprise that is, the consensus of economists polled by Bloomberg before the figure was announced expected a rise of just $7 billion.
The December gain followed an even bigger increase in consumer credit in November, when the figure rose by more than $20 billion. Put together, November and December represented the largest two-month increase in new credit since October and November of 2001.
Revolving debt, mostly from credit cards, grew by $2.76 billion, which is actually down slightly from November. The real driver was non-revolving debt, which includes auto and education loans. The December increase in that category of $16.6 billion was the biggest such monthly gain in that category since November 2001.
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