ED CARSON
2/06/2016 8:30 AM EST
The U.S. economy sputtered into the end of last year, but consumers were charging into the new year, with credit card debt rising at the fastest pace in more than seven years.
Consumer credit outstanding, which includes all consumer borrowing outside of mortgages, rose by annualized $21.27 billion in December to $3.55 trillion, according to Federal Reserve data. Economists had expected $16.5 billion.
Next recession will be from debt bubble
ECON90_020816Revolving credit, which is mostly credit card debt, rose by $5.84 billion after rising $6.36 billion in November. Year over year, revolving credit rose 5.1%, the fastest gain since October 2008, when the financial crisis was at its peak.
Amazon.com (AMZN) reported a strong 22% revenue gain, though that slightly missed views, partly due to currency shifts hurting the dollar value of foreign revenue. Shares Amazon tanked as earnings failed to live up to lofty expectations, partly due to high fulfillment costs.
Amazon took 51% of total retail sales growth in Q4 and 42% in 2015 overall, Wells Fargo estimated. So what else — and where else — are Americans putting on their credit cards? Consumer spending slowed in the fourth quarter and December in particular.
Apple iPhone sales were flat worldwide and likely down in the U.S. Apple forecast its first year-over-year sales decline in 13 years for the current quarter.
Last month Macy’s (M) and Wal-Mart (WMT) announced significant job cuts and store closures. (For what it’s worth, Wal-Mart accounted for 7% of retail sales growth in Q4, Wells Fargo said.) Kohl’s (KSS) on Thursday issued a big profit warning.
Meanwhile, nonrevolving credit, mostly auto and student loans, climbed by $15.43 billion. That’s up from a four-year low of $7.66 billion in November. General Motors (GM), Ford (F) and other automakers had great U.S. sales in 2015, in part due to easier financing and longer loan terms. But domestic auto sales may plateau or fall in 2016 from late 2015 levels, though the mix may continue to shift from cars to higher-priced crossover SUVs and trucks.
