US consumer credit grows: more reasons for recovery optimism

In December consumer credit grew contributing thus to common optimism about the US recovery. According to the data by the Federal Reserve total credit outstanding increased $6.1 billion which is more than twice the $2.3 billion that Wall Street economists had predicted.

"It's encouraging that lenders are at least allowing credit card spending to go up, but also it's not great that the only way that extra consumption can be financed is through credit cards rather than hiring income," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

Increase in consumer credit marked higher consumer spending. Recovery in consumer spending in turn impacted the economy which showed an annual growth pace of 3.2 percent. Consumer spending grew at a 4.4 percent rate in the fourth quarter -- the fastest in more than four years.

December marked the third successive month in which consumer credit outstanding grew. It had risen by a steep $7.7 billion in October before the November and December gains.

Prior to those three increases, consumer credit had contracted for 20 months in a row.

In December, revolving or credit-card debt climbed by $3.5 billion -- the first month in which this category of debt had risen since August 2008.