Consumers increase borrowing by record amount in November
Tuesday, January 8th 2002, 12:00 am
News On 6
WASHINGTON (AP) _ Americans increased their borrowing in November by the largest amount on record. A big rise in auto loans spurred by zero-interest rate financing offers led the way.
Consumer credit soared by a seasonally adjusted $19.8 billion in November, or a 14.6 percent annual rate, the Federal Reserve reported Tuesday.
The dollar increase was the biggest since the Fed began record-keeping in January 1943 and the percentage increase was the largest since November 1995.
Economists were expecting consumer borrowing to rise, but by a lot less _ around $3 billion to $4 billion during the month.
While consumer confidence rebounded in December, it was down sharply in November. The nation's unemployment rate shot up to 5.6 percent in November and layoffs also rose.
But for consumers, the lure of zero-percent financing for cars and heavy discounting on many products was hard to resist, economists said.
``It's apparent consumers haven't been too concerned with softer economic conditions and a weak labor market,'' said economist Richard Yamarone of Argus Research Corp. ``Without the burden of high energy prices and lofty mortgage rates, consumers felt comfortable to borrow briskly.''
Demand for nonrevolving credit, including new cars and vacations, soared by $14.4 billion, or at an annual rate of 18.3 percent in November. That came on top of a $14.7 billion advance or a 19 percent rate of increase the month before.
Americans used their credit cards much more freely in November than during the previous month.
Demand for revolving credit, such as that used for credit cards, rose by $5.4 billion, or at an annual rate of 9.4 percent in November. That compared with a drop of $3.5 billion and a rate of decline of 6.1 percent in October.
In October, consumer borrowing grew by $11.2 billion, or at a rate of 8.3 percent, according to revised figures. That was stronger than the Fed previously reported.
The Fed's report on consumers includes credit card debt and loans for autos, boats and mobile homes. It does not include loans backed by real estate, such as home mortgages or increasingly popular home equity loans.