Despite the recent boost in holiday sales, debts past, present and future make it impossible for consumer spending to drive a recovery.
The holiday shopping season has begun with a hopeful bang.
Americans said they intended to spend more this season, and, so far, there are numbers to back that. But even though the shell shows signs of cracking, those chickens haven't hatched yet. American are planning to spend an average of $751 on gifts this year, up 22 percent from last year, according to a CNBC survey.
Even better, Black Friday weekend sales were up 8.7 percent over last year, according to MasterCard Advisors' SpendingPulse. Over those four days we collectively dropped $50.06 billion on retail purchases (excluding cars but including gas). These numbers came on top of a 4.7 percent increase in sales from the end of October until Thanksgiving.
The week after Black Friday hasn't sucked either. So far, you, me and everyone else in the nation with access to the internet spent $6 billion online from Nov. 28 to Dec. 2, according to comScore. That's a record amount of money and a record number of ugly sweaters and bricks of fruitcake.
But ... and you just knew there was going to be a "but," didn't you? ... a lot of that spending is just adding debt to people who are making less money and relying a lot more on the government for food. The Fed just announced consumer credit increased by $7.65 billion to $2.457 trillion in October.
That number is based on revolving debt (basically credit cards) and non-revolving debt (student & auto loans) and not mortgages. Economists surveyed by Dow Jones had been expecting the number to be around $6.5 billion.
Total consumer debt has increased in 12 of the last 13 months, which tells you people are borrowing to pay for a lot more than just presents. This is happening because wages increased an average of 1.8 percent this year, which is exactly half of the 3.6 percent overall inflation rate.
The yellow stripes represent periods officially declared to be recessions. Food stamp usage increased after earlier recessions, as well. But, as Tim Wallace notes, "this 'recession' is far more devastating than any in the past as the curve is more like a right angle than a curve."
So maybe it's not time to celebrate all that holiday spending.
CONSTANTINE VON HOFFMAN is a writer and sometime standup comedian. His work has appeared in Harvard Business Review, NPR, Sierra magazine, Brandweek, CIO, The Boston Herald, TheStreet.com, and Boston Magazine. @CurseYouKhan