in your wallet?”]Enjoying the cool summer breeze this morning a story came across my iPad caring the headlines from a USA Today story titled “Consumers borrowed more for 8th straight month in May” which in summary says it all. As in short it appears from this article that we are still crack addicted consumer types when it comes to shopping that just can’t seem to keep our plastic in our wallets or purses and live within our means. Now please don’t get me wrong as the credit card plays an important role in our economy allowing for the safe conveyance of products and services via their implied protection means along with the ability to buffer larger purchases. However it’s when they are used as a replacement for the “future ability to earn hard cash” is the point where we see the fundamental issues start to arise with the practice.
As the story points out, part of the increase is due to the fact that people do not have the earning potential [hint, hint] to match their consumer yearnings so out comes the plastic for some spontaneous unprotected shopping. Yes, there are those out there reading this who are saying this is “just folks down on their luck looking to feed their hungry kids” so why pick on them. Well of course you have some of that in earnest, yet as in the 80/20 rule will bet you my hard earned dollars to your credit card purchased donuts this is the 20 percent side at best. As Americans still have not come to grips with the idea they can live with less and in fact need to as the prior age of “super consumerism” has since come and now also gone.
The other aspect of this story which is interesting is that the author says this is the consumer base showing its confidence in the economy and therefore a signal to business to spend more! Ok, so if I have this right the people being pushed into the arms of their “plastic” because they don’t have cash is confidence of their future? Let’s now step back to look at the recent payroll numbers and we will see they are headed south faster than a set of migratory ducks in November. Couple this with the fact we are also seeing unemployment at all time highs, makes me wonder how its possible for business to see credit card spending as positive news?
This “reading” of the one, two set of economic punches regarding the lower than expected payroll number and the climb in unemployment confuses me as they relate to the [positive] justification of credit card use. Yet one thing I’ve come to learn over time is when it comes to the economy, “people like to fool themselves” and sometimes it even works. However at the end of the day, there is no such thing as a free lunch and the piper must be paid, or he will extract his dues just as in the story…