Consumer credit rose to $2.778 trillion, according to the Federal Reserve, an increase of $14.6 billion in only one month. The borrowing amounts were in excess of the $13 billion expected by economists, showing strength and consumer confidence as American releverage to make big purchases. The fastest growing portion of consumer credit continues to be in nonrevolving credit for student loans and car notes. Nonrevolving credit increased by $18.2 billion in December 2012, much faster than any increase in nonrevolving balances since 2001. Consumers have been slow to add new balances after the 2008 recession and credit crunch, which made it difficult for individuals to borrow.
Revolving credit consisting primarily of credit lines and credit cards was cut by $3.6 billion to $849.8 billion. It may be possible that credit card borrowing is being displaced by student lending and car financing, which allows people to dedicate their free cash to higher credit card balances. The amount of credit card debt is well below a peak of over $1 trillion in 2008.
The biggest lender continues to be the U.S. Federal government, which issues the majority of student loan financing, and is the source of the biggest growth in overall consumer credit.
Analysts expect consumer borrowing to grow modestly in 2013 as a combination of low interest rates, an old automotive fleet, and rising participation in college education demands more financing resources. Credit card growth, then, should also be driven by increased spending as the economy rebounds and housing prices rise as expected.