Today the Federal Reserve reported that consumer credit rose by $244.8 billion at a seasonally adjusted annual rate in November:
http://www.federalreserve.gov/releases/g19/current/default.htm
You can see from the chart that this is a healthy jump, much stronger than any recent month and historically stronger than most months. Be cautious, however, because you can also see that there is a great deal of noise in the data. Monthly readings vary greatly.
Consumer Credit
(Click on chart to enlarge)
(Recessions shaded)
Consumer credit outstanding remains lower than it was in 2008 at the economy’s peak just before recession. You can see that years of negative reports have shrunk the total. November’s strong, positive reading is welcome.
Why? Because households rely upon consumer credit to purchase autos and other durable goods such as furniture and home appliances. During recession households desperately tried to shore up their balance sheets by maintaining liquidity and reducing debt. The expenditures required to rebuild the economy consequently suffered. Big borrowing may be a sign of renewed spending.
We’ll see.
(To be fully informed visit http://www.beyourowneconomist.com/)
© 2012 Michael B. Lehmann
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