The Check Is In The Mail

THE COMMON SCOLDS ARE OUT IN FORCE, TUT-TUTTING profligate consumers. There's plenty to reprove them for. Credit-card balances last year surged by 26 percent, the fastest growth rate in a decade. Late payments recently hit a 15-year high. Adjusted for taxes, installment interest is taking the largest bite ever out of disposable income. Personal bankruptcies could set a record this year, with more than 1 million households expected to file.

If business fades--as is implied by the slide in stocks--tapped-out consumers will catch the blame. Retail sales are softening. Serial shoppers seem to be pausing to catch their breath.

But how bad is that, really? "There's nothing to say the sky will fall, even with personal debt so high," says economist Sandra Shaber of the WEFA Group in Philadelphia. She'd pop the whole flock of Chicken Littles into a casserole if she could. Year after year, Shaber says, most Americans manage their money well. Now and then they charge up a storm, as happened last Christmas. Then they repent and throttle back. This ebb and flow is as natural as the tide. Recessions often follow consumer spending shifts, but not always.

Some of the debt statistics today are actually looking pretty good. On-time payments improved for auto loans and revolving home-equity lines of credit. Total delinquencies are up, but not by a troubling amount. Loan growth slowed in May for the third straight month, implying that the borrowing orgy has petered out.

A lot of the increase in credit-card use isn't adding to debt at all. It's "convenience" shopping by people who choose to put down plastic in place of cash. Some 36 percent of account holders now pay their monthly bill in full, up from 29 percent in 1991, according to surveys by RAM Research in Frederick, Md., which gathers industry statistics. In many cases, they're using their cards to turn a profit by racking up frequent-flier miles and other rewards.

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