A while back I made the case that the U.S. has been in perpetual recession for several years, and the only reason why it hasn't felt like a full-blown depression (for those who managed to hold on their jobs) is because we've been running up massive government and consumer debt.
As you can clearly see, the current rates of growth of the national debt...
and consumer debt...
...are unsustainable. Unfortunately, as far as consumer debt is concerned, the rate of growth has recently increased. Bloomberg reported Monday that consumer debt grew far beyond expectations in May, with credit card debt growing at its fastest rate since the peak of the credit bubble in 2007:
Consumer credit climbed more than forecast in May, led by the biggest jump in credit-card debt in almost five years that may signal Americans are struggling to make ends meet.
The $17.1 billion increase, exceeding the highest estimate of economists surveyed by Bloomberg News and the largest this year, followed a $9.95 billion gain the previous month that was more than previously estimated, the Federal Reserve said today in Washington. Revolving credit, which includes credit card spending, rose by $8 billion, the most since November 2007.
The increase in the rate of growth of consumer credit is terrible news, considering that consumers have deleveraged very little since the recession and average household debt has been hovering around 150% since Bush's second term. But the fact that credit card debt grew so fast in May while consumer spending remained flat leads me to believe that a great many Americans charged essentials to their cards in May. This is an ominous sign. Not only is masking an economic depression by running up massive debt much worse for the economy in the long run, but an economy that runs up credit card debt with essential purchases is an economy that has one foot in the grave.