The One Big Question About the Economy That Doesn't Add Up
Is the economy Trump strong? Of course, if you listen to the administration, the answer is a resounding yes. As I look at the data, it makes me wonder. Let's take a look at a few data points.
In order to have a strong economy, you need a strong consumer spending money. This week we got a glimpse of the retail sales number and it was a negative once again. It was the first time since April 2012 that retail sales have declined for three straight months.
What is even more curious is the fact that these numbers include the historically strong holiday shopping numbers and they were still weak.
Consumer Spending, Increased Debt?
Now take a look at the debt numbers. Credit card balances have eclipsed 1 trillion dollars. According to WalletHub, the statistics get even more interesting. WalletHub released the results of its 2018 Credit Card Debt Survey.
- The average household owes a record $8,600 – $138 more than at the height of the Great Recession.
- The $67.6 billion in credit card debt that we added in Q4 2017 is the highest quarterly accumulation in 30 years – 68% higher than the post-Great Recession average.
So, here is the million dollar question. If consumers are racking up credit card debt to this extent, then why is that not reflected in the retail sales numbers?
The only other option is that consumers are using credit card debt as a means to survive and pay bills. The answer is probably a combination of the two. However, that doesn't lend to the notion of a strong economy.