In November, total consumer credit experienced a significant increase of $23.7 billion, surpassing the $5.8 billion rise from the previous month. This translates to an impressive 5.7% annual rate of growth, compared to a revised 1.4% increase in the prior month.
Economists initially forecasted an $8 billion increment, according to the Wall Street Journal’s prediction.
Key Data
Revolving credit, predominantly associated with credit cards, exhibited a remarkable surge at a rate of 17.7% following a 2.7% gain in the previous month. This substantial increase represents the most significant growth since March 2022.
In contrast, nonrevolving credit, which primarily encompasses auto and student loans, experienced a more subtle rise of 1.5% after a 0.9% increase in the previous month. This particular credit category typically demonstrates less volatility. It is important to note that mortgage loans, comprising the largest proportion of household debt, are not included in the Federal Reserve’s data.
Big Picture
Economists attribute the sharp acceleration in consumer credit growth to the commencement of the holiday shopping season. Previously, consumer credit had been on a downward trajectory due to the Federal Reserve’s aggressive rate hikes and tightened lending standards deployed by banks. However, with expectations that the Fed will initiate rate cuts, consumers may choose to borrow at a faster pace.
Market Reaction
During afternoon trading on Monday, stocks displayed an upward trajectory, while the 10-year Treasury yield observed a slight decline to 4.01%.
