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Americans Went Credit Crazy in November—And That's a Good Thing

Is all that credit card debt really such a good idea?



Americans got back into borrowing in a big way in November, wildly exceeding forecasters' expectations. Consumer borrowing grew 10 percent, the largest monthly increase since 2001, pushing credit expansion back toward its pre-crash trend and giving more credence to hopes of a stronger economy in 2012.

The biggest increase came in student loans guaranteed by the government (more people go to school during economic downturns) and in auto loans, but the more interesting number involves credit-card spending.

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Americans Now Spend $1.2 Trillion a Year on Stuff We Don't Need

A new study says more than 11 percent of consumer spending is now dedicated to nonessential goods.


What recession? Despite the fact that most Americans are still struggling in the worst economy since the Great Depression, a "non-scientific study" from the Wall Street Journal says that U.S. citizens now spend $1.2 trillion annually on nonessential goods. For context, that's more than 11 percent of overall consumer spending.

A decade ago, nonessential goods amounted for only about 9 percent of consumer spending, and in 1959, that number was 4 percent, adjusted for inflation. By contrast, this year, nonessential goods purchases are up 3.3 percent from where they were last year, while spending on stuff that really matters—food, shelter, medicine, etc.—is up only 2.4 percent.

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