Consumer Credit in the U.S. rose in November 2012 in some specific areas, including the automotive sector and in the world of student loans. This credit debt increase, totaling $16 billion, rose from $14.6 billion in October. Interestingly, the predicted level was only $12 billion, a good sign that credit is getting better. But what are the effects of this rise on the larger economy?
Credit and the Economy
With the rise in consumer debt, there is an up-tick in the quality of the economy, as people are purchasing more, trusting that their credit is of higher quality than in previous months. The growing capacity to borrow will also push the expansion of credit as the months pass, predict experts in the field. However, even as consumer credit rises, stocks are falling, including the Standard and Poor’s, or S&P, 500.
Part of the credit rise has to do with growing student loans in the country. Student loans, which are now lent by the federal government, also saw a rise of $4.9 billion in November. A component of the credit rise in November 2012 may have been related to fear over the recent fiscal cliff kerfuffle in Washington, which had already begun to scare some investors back then.
With a deal having passed, it is likely that consumer credit will grow steadily as faith in an improving economy rises. The expanding push in credit will help to bolster the economy as we go forward into the cold opening months of 2013. Hopefully it will be pushed forward by the new fiscal cliff deal, though the potentially gathering storm in the economy in late February or early March might cause another dark mark to form in the upcoming predictive data.
Unfortunately, predictive data will have to wait until about five weeks after last month’s end for the next Consumer Credit Report to see how things have progressed – the standard waiting period for the numbers to be crunched, the t’s crossed, and the i’s dotted. Data for the report is collected from a variety of resources, including major retailers, banks, finance companies, and credit unions, as well as other resources.