Consumer Borrowing Soared in November

Americans increased their borrowing in November by the largest amount in a decade, the Federal Reserve said Monday.

Consumers took out more loans to buy cars and used their credit cards more to buy holiday gifts, a sign to some analysts of their growing confidence in the economy.

The Federal Reserve said total consumer borrowing rose $20.4 billion in November, the largest increase since a $28 billion gain in November 2001.

A category that measures credit card debt rose $5.6 billion, the most since March 2008.

Another category that tracks auto loans increased $14.8 billion, close to July’s increase, which was the biggest since February 2005.

The third consecutive monthly increase in overall borrowing is a departure from the thriftier habits practiced during and immediately after the recession, when credit tumbled and the savings rate climbed.

Many Americans are taking on more debt as the unemployment rate drops and the economy improves, albeit modestly.

Consumer confidence is up, holiday sales were solid and the domestic auto industry is coming off its best two sales months for the year.

That has prompted Americans to step up spending, even though their wages did not keep pace with inflation in 2011. Many are tapping into their savings or borrowing more as a result.

Borrowing has increased in six of the last nine months. And consumers saved just 3.5 percent in November. That is the lowest savings rate since the recession began in December 2007.

Americans saved less than 3 percent of their after-tax income in the three years before the recession began. But in 2008, as the unemployment rate began to rise and home prices fell, consumers cut back on spending, borrowed less on their credit cards and saved more.

The annual savings rate rose above 5 percent in 2008 and stayed above that level until 2011. At the same time, consumer borrowing fell for 26 consecutive months, from October 2008 until December 2010.

Economists caution that Europe’s debt crisis could slow growth in the United States. A recession in Europe could damp demand for American exports and weaken financial markets.

The Federal Reserve’s borrowing report covers auto loans, student loans and credit cards. It excludes mortgages, home equity loans and other loans tied to real estate.

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