Americans increased their borrowing in November by the largest amount in a decade, the Federal Reserve said Monday.þþConsumers took out more loans to buy cars and used their credit cards more to buy holiday gifts, a sign to some analysts of their growing confidence in the economy.þþThe Federal Reserve said total consumer borrowing rose $20.4 billion in November, the largest increase since a $28 billion gain in November 2001.þþA category that measures credit card debt rose $5.6 billion, the most since March 2008.þþAnother category that tracks auto loans increased $14.8 billion, close to July’s increase, which was the biggest since February 2005.þþThe third consecutive monthly increase in overall borrowing is a departure from the thriftier habits practiced during and immediately after the recession, when credit tumbled and the savings rate climbed.þþMany Americans are taking on more debt as the unemployment rate drops and the economy improves, albeit modestly.þþConsumer confidence is up, holiday sales were solid and the domestic auto industry is coming off its best two sales months for 2011.þþThat has prompted Americans to step up spending, even though their wages did not keep pace with inflation last year. Many are tapping into their savings or borrowing more as a result.þþBorrowing has increased in six of the last nine months. And consumers saved just 3.5 percent in November. That is the lowest savings rate since the recession began in December 2007.þþAmericans saved less than 3 percent of their after-tax income in the three years before the recession began. But in 2008, as the unemployment rate began to rise and home prices fell, consumers cut back on spending, borrowed less on their credit cards and saved more.þþThe annual savings rate rose above 5 percent in 2008 and stayed above that level until 2011. At the same time, consumer borrowing fell for 26 consecutive months, from October 2008 until December 2010.þþThe Federal Reserve’s borrowing report covers auto loans, student loans and credit cards. It excludes mortgages, home equity loans and other loans tied to real estate.
Source: NY Times
