3/8/11
This morning’s (i.e., Tuesday, 3/8’s page A5) Wall Street Journal reports the great news that consumer non-mortgage borrowing grew in January at a 2.5% annual rate. Economic and financial cognoscenti are delighted that the consumer is out there digging a hole for himself again, but the economic solons are sullen and down in the mouth at the news that the 2.5% increase was largely attributable to a 7% increase in non-revolving debt, i.e., loans for cars, college, and boats. Revolving debt (i.e., credit card debt) shrank at a 6.4% annual rate. But the economic wunderkinds did find some solace, some glimmers of hope, in the otherwise baleful news that consumers are actually getting themselves out from under credit card debt. Opined IHS Global Insight economist Gregory Daco:
“Strong demand for credit for automobiles is a good sign for consumer spending. We might see a few more drops in revolving credit over the coming months, but there is evidence that we’re at a turning point.”
Oh, boy! Consumers are doing what comes all too naturally for the average American by burying themselves in credit card and other consumer debt. This, of course, is good news because such financial self-immolation will help us emerge from a crisis that arose from too much debt, primarily too much consumer debt. And it is the smart guys, the economic wise men, the best and the brightest who are spewing this counter-intuitive nonsense.
Ever wonder why I am seemingly permanently bearish on the markets, the economy, and the future of the Republic?
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