With zero percent interest deals getting buyers back into showrooms, the amount of U.S. consumer credit outstanding posted a record surge in November 2001, the Federal Reserve announced on Jan. 8.

Consumer debt rose by a whopping $19.9 billion in November to a seasonally adjusted $1.653 trillion. That was on the heels of a revised $11.2 billion gain in October. October had originally been reported as a smaller $7.0 billion advance.

The annualized rate of growth, at 14.6 percent, was the fastest since November 1995, when it rose at a 19.11 percent annual rate.

Economists said the surge was a reflection of the unexpected strength seen in auto sales. Some analysts, while acknowledging the surge in auto sales was largely due to zero percent interest deals, called it a hopeful sign for economic recovery.

Many Wall Street analysts had predicted a smaller gain.

The November increase was led by "nonrevolving debt," a term for closed-end loans for cars, boats, educational expenses and similar items. More than half of nonrevolving credit consists of car loans. The nonrevolving sector rose by $14.4 billion in November, after a $14.7 billion rise in October.

The report also shows the Federal Reserve's campaign of lower interest rates, which began in January 2001, may be paying dividends in the form of increased economic activity. New car loan rates had moved lower during the year but dropped sharply after the Sept. 11 attacks as car makers lured car buyers back into the showrooms by offering zero percent interest deals.

On Jan. 4, the National Automobile Dealers Association (NADA) estimated car sales totaled about 17.1 million units in 2001, making it the second best year on record, after 2000.

Still, as carmakers attempt to wean customers off low-cost financing and other incentives, they may a steep drop-off in sales volume, according to analysts, which will also be reflected in the consumer credit numbers.