If Americans are using their credit cards more, is that good news or bad news for the economy? Well, it can be a little bit of both. When people are running short of disposable income, they will often turn to their credit cards to fill the gap, especially if it's more of a cash-flow issue instead of a long-term concern over income. And consumer credit is a way to expand the consumer economy without having to inject more cash into it.
So the news that consumer credit jumped by $17 billion in May is significant for a couple of reasons. That's nearly double the $9.9 billion increase in credit we saw in April. Counting just revolving debt - which is mostly credit cards - the increase was $8 billion, which is the largest that figure has been since November 2007.
That's also a pretty sizable change for the way people think about the economy. Does it mean that consumers are feeling more confident about their finances going forward? Or are they simply running short of disposable income? It's hard to say, but either way, that extra $17 billion pumped into the economy is a good thing for all of us.
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