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Consumers were confident enough at the end of 2011 to push borrowing levels up by $20.4 billion in November, the Federal Reserve reported late Monday.
Outstanding consumer credit rose to $2.48 trillion during that month, the Fed said. That was the highest level since November 2001, and it was more than twice the predictions of economists surveyed before the report was released.
The credit increase corresponded with healthier employment numbers; people are more likely to borrow if they believe they will have the wherewithal to pay the money back without serious penalty. So, it is likely that the December credit levels are higher than they have been for the past several years during the recession and slow recovery.
Is Increase Sustainable?
Still, the increase might not be sustainable, so small businesses shouldn’t adjust their sales forecasts just yet.
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Its task for most of the past 100 years has been to regulate growth — not to manage decline. Much of the commentary you saw prior to 2008, such as Ben Bernanke’s sincere lack of concern about a US housing bubble (“I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis…”) is, of course, duplicated today as we confront a similar endgame in sovereign debt.
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Dispatches From The Front 