American credit card debt is growing at the fastest rate in years, a fact that may signal coming trouble for the banks that issue them.
The surge in credit card borrowing comes as credit card default rates are gradually rising, albeit from low levels, and may reflect the fact that it has become harder for consumers to borrow against the value of their homes, both because home values have fallen in many markets and because mortgage lending standards have tightened.
Increases in outstanding credit card debt can indicate a strong economy, as confident consumers spend more, or it can indicate the opposite, as troubled consumers find it harder to pay their bills. The fact that the November increases in credit card debt came during what appears to have been a weak holiday shopping season could be an indication of the latter.
The holiday sales data indicated that consumers cut back in late 2007. But the consumer credit numbers would seem to indicate that they wound up further in debt anyway. Those are not good signs for the economy as 2008 begins.