U.S. consumers did not hold back with their credit cards during the 2011 holiday season, with borrowing surging by $19.3 billion to $2.498 trillion in December. The credit swell may be an additional sign that consumers are feeling increasingly confident about the economy and marks the second consecutive month that Americans took on more debt.
The Federal Reserve numbers showed that revolving credit, which includes credit card debt, increased by $2.8 billion in December from the previous month. Nonrevolving credit, which includes auto, student and vacation loans, jumped by $16.5 billion in December.
The credit jump comes in the midst of a modest increase in personal income and also in personal savings for consumers, indicating consumers probably paid for their holiday spending in 2011 by using credit.
The news comes on the heels of last week’s report on January employment, in which the unemployment rate fell unexpectedly to 8.3 percent and new nonfarm payroll jobs swelled by a much larger-than-expected 243,000.
But Federal Reserve Chairman Ben Bernanke, testifying Tuesday before the Senate Budget Committee, cautioned against too much optimism based on one month’s job gains and urged lawmakers to focus on fiscal responsibility.
“We still have a long way to go before the labor market can be said to be operating normally,” Bernanke said in prepared remarks.