U.S. consumer credit soared by $40 billion in November, more than double expectations and compared with a $16 billion gain in October, according to Federal Reserve data released Friday. That translated into an 11% annual gain — the largest move in a single month in 20 years.
Economists had been expecting a $20 billion gain, according to the Wall Street Journal forecast.
Revolving credit, such as credit cards, rose at a 23.4% rate after a 7.8% gain in October. That’s the highest rate since April 1998.
Total revolving credit is still below its pre-COVID peak.
The jump may reflect households using credit more freely. During the pandemic, many households curtailed their credit card debt or used stimulus funds to pay down balances, said Nancy Vanden Houten, U.S. economist at Oxford Economics.
TJ Connelly, director of research at Contingent Macro, said he expects credit to continue to expand, but some of the strong gain in November might be due to the necessity of using a card when shopping online.
“We could see consumers pay down balances in the first quarter,” he said.
Nonrevolving credit, typically auto and student loans, rose 7.2% after a 3.4% growth rate in the prior month. This category of credit is much less volatile.
The data does not include mortgage loans, which is the largest category of household debt.
U.S. stocks
SPX,
DJIA,
closed lower on Friday after the weaker-than-expected job gains in December.
