U.S. shoppers' impressive performance over the Thanksgiving weekend -- and in recent months -- raises a question: Where did they get the money?
New data from the New York Fed suggest they borrowed a good chunk of it.
Consumers spent a record $52.4 billion over the first weekend of the holiday shopping season, up 16 percent from the previous year, according to a survey cited by the National Retail Federation. The big weekend follows a couple months of strong growth in retail sales.
With unemployment at 9 percent, hiring slow and wages largely stagnant, consumers don’t have a lot of new income to drive the spending. Data from the Commerce Department suggest they did get a boost in October, but outlays have generally been rising faster -- at an average rate of 0.5 percent in the four months ended October, compared to 0.1 percent growth in disposable income.
Judging from New York Fed data for the third quarter of 2011, consumers are getting some of the money by going back into debt. Balances on home-equity lines of credit rose 2.2 percent from the previous quarter to $730 billion, the sharpest gain since the second quarter of 2008. Auto loans rose 2.4 percent, the biggest jump since 2007. Consumer debt declined overall, but largely due to shrinking mortgage balances, which reflect defaults and lower house prices as much as frugality.
It would be more encouraging to see spending grow because more people landed new jobs. Hopefully, consumers' optimism will spread to employers.
(Mark Whitehouse is a member of the Bloomberg View editorial board.)