Outstanding consumer credit, which primarily includes credit cards, auto loans, and student loans, grew at a seasonally adjusted annual rate of 7.1%, according to Federal Reserve data.
Credit purchases by US consumers continued to increase in the last months of 2022 and in the month of November the increase in loans amounted to almost $28,000 million, according to data from the Federal Reserve.
The monthly increase, which was driven by higher revolving credit rates, was below October’s $29.12 billion jump, but extends a historic period of credit dependency, despite a year of skyrocketing inflation.
Still, the numbers turned out to be higher than expected by economists, who forecast a monthly rise of $25 billion, according to Refinitiv consensus estimates.
Outstanding consumer credit, which mainly includes credit cards, auto loans and student loans, grew at a seasonally adjusted annual rate of 7.1%, according to the report.
For its part, revolving credit, which mainly includes credit cards, grew by 16.9%.
It’s the biggest jump in revolving credit seen in three months and the fifth-biggest monthly increase in the Fed’s record-keeping dating back nearly 55 years.
Ted Rossman, a senior industry analyst at Bankrate and Creditcards.com, told CNN that much of those increases can be attributed to holiday shopping and inflation has played a big role.
Household economy weakens
In the midst of this period of high inflation, consumers have borrowed more for their expenses, but they have also kept their finances afloat, for the most part.
However, household balance sheets are showing some signs of weakening, with various federal data showing delinquencies on the rise and savings levels declining.
Rossman said it’s mostly credit card debt that’s been driving the rise.
The Federal Reserve has been rapidly raising interest rates to cool inflation. That has trickled down to historically high interest rates for auto loans, credit cards and personal loans.
A new Fed report showed that the average rate for a 60-month new car loan was 6.55%, credit card plans 19.07% and personal loans 11.23%.