U.S. Consumer Credit Posts Largest Gain in 16 Years -- Update

U.S. consumer borrowing posted the largest monthly gain in 16 years, buoyed by increased consumer confidence in the economy.

Outstanding consumer credit rose by $27.95 billion in November from the prior month, the biggest increase since November 2001, according to new data from the Federal Reserve.

This measure of non-real-estate debt climbed at an 8.83% seasonally adjusted annual rate, the fastest pace in more than two years, the Fed said Monday.

The November increase topped expectations of economists surveyed by The Wall Street Journal. Total outstanding credit had increased a revised $20.53 billion in October.

Revolving credit outstanding, mostly credit cards, increased at a 13.3% annual pace in November. This category of debt grew by $11.19 billion, the largest increase in a year.

The sharp rise in November borrowing can partially be attributed to Americans' rising consumer confidence. Though it dipped in December, the Conference Board's measure of consumer confidence hit a 17-year high in November.

"There's no question that on the retail sales side of things and the revolving credit side of things, improved [consumer] sentiment helped," T.J. Connelly, head of research at Contingent Macro Advisors, said of the increase in consumer credit.

Nonrevolving credit outstanding, mainly student and auto loans, rose at a 7.2% annual pace in November. This measure increased $16.8 billion. Mr. Connelly said the increase in this debt was underpinned by a rise in auto sales in the fall, as Americans rushed to replace vehicles destroyed by late-summer hurricanes.

"The key here is will the auto sales continue without the hurricane replaced buying?" Mr. Connelly said.

Household debt totaled $12.955 trillion in the third quarter, up 0.9% from the spring, the Federal Reserve Bank of New York said in November. That was the most on record, though the figure wasn't adjusted for inflation.

Write to Sarah Chaney at sarah.chaney@wsj.com

(END) Dow Jones Newswires

January 08, 2018 17:35 ET (22:35 GMT)