Consumer Debt Climbs by $4.5 Billion in November

Americans took out $4.5 billion more in consumer debt than they paid off in November as consumers increased their purchases for the holiday season, the government reported Monday.

The Federal Reserve Board said the November increase followed a revised increase of $3.9 billion in October and a tiny $2-million rise in September.

November’s increase represented an 8.2% rise in the annual rate of credit growth, up from a 7.2% pace in October. The November gain was pinned on brisk growth in the category of debt that includes credit cards, while auto loans grew at about the same rate as in October.

“It’s just another piece of evidence that consumers started to spend more for the holiday season,” said Michael Evans, head of a Washington consulting firm. “Consumers became more optimistic about spending and about borrowing. For the moment, consumers are relatively satisfied with the way the economy is going.”

Evans noted that retail sales took off in the days after Thanksgiving and that retailers reported strong sales continuing into December.

Consumer spending is watched as a barometer of economic health because it accounts for two-thirds of the gross national product.

Revolving debt, the category that includes credit cards, increased by $3.1 billion during November, a 20.3% annual rate of growth. That followed a $2.6-billion increase during October, or a 17.5% rate of growth.

Auto loans rose by $1.4 billion during November, a 5.8% annual rate of growth, after having risen by $1.3 billion during October.

Bank and credit union loans not secured by real estate decreased by $49 million in November, a 0.4% drop in the annual rate, after falling by $50 million a month earlier and by $158 million in September.

Loans for mobile homes increased by $73 million, or a 3.4% annual rate of growth, in November, up from $30 million in October.

Overall, consumer debt reached a seasonally adjusted $661.7 billion in November, up 8.7% from a year earlier.