Profits at big U.S. companies broke records last year, and so did pay for CEOs. The head of a typical public company made $9.WASHINGTON – Consumer borrowing rose more than forecast in December, driven by demand for auto and student loans.
Credit increased by $19.3 billion to $2.5 trillion, the Federal Reserve said Tuesday. The advance topped the $7 billion median forecast of economists surveyed by Bloomberg News and followed a $20.4 billion rise the previous month.
“A gradual normalization of consumer credit growth could be one sign that confidence is strengthening among households,” said Dana Saporta, an economist at Credit Suisse in New York. “This dynamic would be positive news for consumer spending as a whole and, ultimately, for job creation.”
An improving job market may be giving households the courage to take on more debt to sustain spending, which accounts for about 70 percent of the economy. At the same time, increasing dependence on credit may be an indication the gains in employment have yet to push wages high enough to single-handedly give consumers the means to keep shopping.
The median forecast was based on a survey of 37 economists. Estimates ranged from a decrease of $8 billion to an increase of $15 billion.
The back-to-back increase at the end of 2011 was the biggest since October-November 2001.
Non-revolving debt, including educational and auto loans increased by $16.6 billion in December, the biggest gain since November 2001, Tuesday’s report showed
Industrywide sales of cars and light trucks totaled 12.8 million for all of 2011, a 10 percent increase from 2010, according to researcher Autodata Corp.
Demand for credit may keep growing as demand keeps improving. Auto sales climbed to a 14.1 million annual rate last month, according to industry data. Excluding a surge in August 2009 that reflected the government’s “cars-for-Clunkers” program, it was the strongest month since May 2008.
General Motors and Ford, the largest automakers by U.S. sales, forecast industrywide deliveries will rise to as much as 14 million in 2012, including medium- and heavy-duty trucks.
GM makes pickup trucks at an assembly plant in southwest Allen County.
