On Wednesday, the U.S. Senate passed its version of a $168 billion fiscal stimulus bill. The House of Representatives quickly approved the new bill, and President Bush is expected to sign it ASAP. Checks are practically in the mail: $600 for individuals, $1,200 for married couples, or about half as much for those Americans who don't pay income tax at all. It is the clear intention of Congress and the White House that all patriotic Americans promptly cash those checks and spend 'em, thus boosting aggregate demand in the economy, and warding off the oncoming recession.
But before we all run out to Best Buy in search of that HD flat-screen TV we've been lusting after, we might want to review today's Page 1 Wall Street Journal article on rising credit card delinquencies.
It has been clear for months that Americans, no longer able to draw down on their home equity for quick cash, are running up larger balances on their credit cards. But now that source of instant prosperity is beginning to run dry as well. In December, reports the Journal, "an average of 7.6 percent of credit-card loans were either at least 60 days delinquent or had gone into default, up from 6.4 percent a year earlier." The amount of outstanding credit is actually beginning to fall, as consumers have gotten antsy about their economic prospects.
"The result could be a sharp pullback in consumer spending that would further weaken the slowing U.S. economy," predicts the Journal.
Not to worry! That's what the checks from the government are for, right?
Truly, this is the through-the-looking-glass economy. Living beyond our means is supposed to be a bad thing, but when times get really hard, we are supposed to open up our pocketbooks even more, instead of attempt to balance our personal budgets.
How the World Works refuses to be party to this madness. I'm going to take my check and use it to pay off some of my credit card debt. Call me a traitor, but I'd rather have no finance fees than a new TV.
What are you going to do with your check? Post your answer here and at the end of the day I'll total up the responses.