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Total consumer credit increased at an annual rate of 4.8% for November to hit $3.07 trillion, according to a Federal Reserve consumer credit report (link opens a pdf) released today.
Investors watch consumer credit closely for two main reasons. Credit gives an indication of consumer sentiment, and growing numbers can mean either more confident or more cash-strapped consumers. Demand for credit also affects interest rates, which could rise as more consumers want more money.
After expanding at a seasonally adjusted annual rate of 7% for October, this month's $12.3 billion month-over-month increase clocked in $1.9 billion below analyst expectations.
Revolving credit (no fixed number of payments, e.g., credit cards) increased at an annual rate of 0.6%. While the month-to-month gain was relatively small, November's increase comes on the heels of October's 5.6% rise, the third largest of the recovery.
Nonrevolving credit (fixed installments, e.g., car payments) packed the most punch, up 6.4% as vehicle and student loans continue to grow. But The Wall Street Journal reported that student loans may be inflated due to government purchases of private loans.