Card Outstandings Rise!

We all felt it this Holiday season - enough already.  We're going to celebrate. 

And celebrate we did, as we hit our cards Big Time.  Retailers had their best holiday shopping season since 2006.  And today, the Fed confirmed for us that we experienced the first increase in credit card use in over 2 years in December. Credit card outstandings rose 3.5 percent, and on auto loans increased 2.8 percent. 

How important is this?  Very.  Consumer spending accounts for 70 percent of domestic economic activity.

Add this news to those burgeoning 401Ks riding a market rally, and we can expect consumer confidence to continue to rise.  But it will never again be fueled by 20% or more year to year gains in the value of our homes.

Implications?  We expect a renewed wave of balance transfer marketing by the likes of Cap One - and robust retirement savings season for non-traditional and self-directed, as the savings rate continues at levels far higher than before the Great Recession despite all the borrowing.  Has reality set in?  Good.  Now that our household budgets are more realistic, maybe public ones someday will be, too.