Consumer credit in the U.S. increased by an adjusted $16.1 billion in November, driven primarily by increased borrowing for automobiles and student loans, to surpass a $12.8 billion forecast by economists.
Increased demand for student loans and cars, as well as gains in the labor market, have led economists to forecast additional consumer credit growth in early 2013. The rise in borrowing ability and an improved labor market indicate that consumer spending, which accounts for 70 percent of the U.S. economy, will drive the growth in consumer credit, Bloomberg reports.
“We’ve seen four straight months now of very significant increases in overall consumer credit,” Thomas Simons, a money-market economist at New York-based Jeffries Group, Inc., said, according to Bloomberg. “I would expect that’s going to continue.”
Non-revolving debt, including auto purchases and college tuition, grew $15.2 billion in November after a $10.6 billion increase in October. Revolving debt, which includes credit cards, increased by $816.9 million in November after a $3.44 billion increase in October.
American consumers could turn to credit card use in coming months due to the rise in the payroll tax effective Jan. 1 under the fiscal cliff deal.
“People might be caught by surprise in January, when they see how much smaller their take-home pay is, and we might see some fuel for the consumer-credit number,” Action Economics Chief Economist Michael Englund said, Bloomberg reports. “The likely pattern is that we will see some run-up in consumer credit for three or four months.”