I don't go shopping very often. I
like to buy things, don't get me wrong. But I don't like to shop, don't like the marketing, the noise, the lines.
But when I
do go shopping, I am startled by how full the parking lots are and how busy the shops are.
After all, consumer confidence is almost as low as the approval ratings for President Bush. Everyone but the rich are suffering badly and broadly, losing their homes, declaring bankruptcy because a child or parent falls ill, and so on. So how can we Americans keep on buying stuff?
An
article in the Tribune confirmed my suspicion (full text at end of this entry): many Americans have simply given up on the idea of ever digging themselves out of their debt hole. So what the hell? Use the credit card! Load it up! Get another one and load up that one! Buy a big LCD TV. Buy a new cell phone. Hey, buy an
iPhone! Pay my bill? Maybe. I sure hope so. But since my outstanding balance is already $12000, what difference does it make if I bump it up to $14000 or $20000? Oh and when I have to take my child to the emergency room because I couldn't afford preventive doctor visits, I will put
that on my credit card, too. If they will let me.
What a doomed nation....
Borrowing with credit cards surges
Consumers boosted their borrowing in May, mostly reflecting heavy credit card use to finance their purchases.
The Federal Reserve reported Tuesday that consumer credit increased at an annual rate of 3.6 percent in May, roughly the same pace as logged in the prior month.
The pickup pushed total consumer debt up by $7.78 billion, to $2.57 trillion.
The increase was led by much stronger demand for revolving credit, which is primarily credit cards. Use of revolving credit rose at a 7.1 percent pace in May, a month in which a flow of tax rebates helped to energize consumer spending. In April consumers cut back on such credit at a 0.5 percent pace.
Still, the longer-term trend shows that consumers have been charging more of their purchases on credit cards as banks have tightened lending standards on other types of loans.
"Consumer spending was so large in May that consumers used their income tax rebate checks and brought out the plastic as well," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York. "This double-dipping approach cannot keep the consumer afloat forever."
Demand for non-revolving credit used to finance cars, education and other things, meanwhile, slowed to a 1.6 percent increase in May. That was down from a growth rate of 6.1 percent in April and was the slowest since December.
Overall, revolving debt jumped $5.69 billion during May and non-revolving debt increased $2.09 billion.
The Fed's measure of consumer borrowing does not include any debt secured by real estate, such as mortgage or home equity loans.
Consumer spending accounts for more than two-thirds of economic activity.
