Consumer Credit Soars in December for Second Straight Month

The Federal Reserve said late Tuesday that consumer credit outstanding in the U.S. increased at a 9.3 percent annual rate in December, the second month of 9 percent+ gains.

The gains were driven by a massive spike in non-revolving debt, mostly comprised of student and auto loans.  Non-revolving debt in December increased by $16.5 billion, or at an annualized rate of 11.8 percent, to end the year at $1.697 trillion, an all-time record. A spike in automobile sales was the main contributor as many automakers and dealers have relaxed the strenuous lending standards deployed after the financial crisis of 2008.

Revolving debt, primarily credit cards, increased at a 4.1 percent annual rate in December, according to the monthly consumer credit data release (also called the G.19 report). Revolving debt increased at an 8.4 percent annual rate in November. Total credit card debt outstanding was $801 billion at the end of 2011. December marked the first month since December 2010 that credit card debt outstanding was above $800 billion after declining precipitously from a high of $972 billion in 2008.

Total consumer credit outstanding – not including debt backed by real estate – was just shy of $2.5 trillion at the end of 2011.