In 2011, the total amount of consumer borrowing passed the $20 billion mark according to the Federal Reserve’s statistic. It’s gone nothing but up since then. Many analysts will tell you that this is a positive sign and indicates that consumers are confident in the economy’s trajectory.
Naturally, here at Moneylicious! we think this is complete nonsense.
It’s much more likely that consumers are loading up the credit cards for frivilous holiday expenditures and to cover living expenses since meager salaries and part-time hours are no longer able to compete with runaway inflation — which also doesn’t exist according to the “experts” and the Federal Reserve.
Bought a jug of milk lately?
Here at Moneylicious! we think the premise of consumer confidence is false.
Increased holiday sales are buoyed by a “reverse depression” phenomenom. People are tired and frustrated of eeking out meager, debt-ridden existences and rationalize overexpenditure and debt-based temporary fun around the holidays as they’re one of the few times a year that allows a bit of escapism from the unceasing drudgery of the 9-5 rat race.
So we run up our credit cards in the hopes that one day or so will be worth another 360+ days of drudgery.
For many people, it is.
Let’s go further into this:
Supposed “consumer confidence” is apparently an economic indicator designed to measure how American consumers feel about the economy as it relates to their own, personal financial situations.
They say that the more confident you are in the economy as a whole, the more likely you will spend and take on debt.
If the economy grows, Americans should purchase and consume more.
If it contracts, then Americans should save more according to this paradigm.
Well, call me crazy here, but if the only impetus Americans have for saving money is worry about the economy — i.e. the financial situations of all the other 300 million and more people in this country then we have some serious work to do here. It’s obvious that the basis of much of America’s financial behaviors and habits are completely backwards.
Paying for consumables and knick knacks you can’t afford with credit cards you can’t pay off is not healthy or rational behavior for a first world, supposedley advanced economy. Debt is the ruin of all empires.
Here at Moneylicious! we think a pig is still a pig no matter how much lipstick you put on it nor what fancy metric or namebrand you try to give it. Wilbur was still a pig, wasn’t he?
The credit card factor is particulalry troubling in this whole mess. That’s because credit cards can much more often be used for impulse purchases.
And impulse purchases are by nature usually things we don’t need and can’t afford. Can you really go a gazillion dollars worth of debt-financed purchases of worthless junk imported from China “economic growth” or signs of “consumer confidence”? I don’t think you can.