The economy appears to be as strong as the Fed seems to worry that it is. Some major economists are actually upgrading their estimates for the fourth quarter and their 2007 forecasts. Consumers dug deep into credit in November, up a 6.2% rate. Taking about 2% off for inflation, that's an impressive rate. The economic hand-wringers were out, claiming that a steep rise in credit card purchases was dangerous, but they consistently ignore other important factors, such as the aggressive moves by credit card companies to expand the use of their cards. These include various affinity cards for mileage points, hotel stays, and discounts. More important is the increase in use of credit cards to finance small business. When you have 80,000 net new businesses formed in the U.S. per month, their purchases are mixed in with consumers in these data.

While many people perceive consumer confidence surveys by the Conference Board and others to forecast the health of they economy and assume that they are accurate  they are not. Measuring feelings is not as good as measuring actions. Yet these data are reported every month as if they are important. Use of credit is a good indicator of confidence, because, despite what some complain is easy credit, consumers do not want to incur debts they cannot pay, and lenders do not want to extend loans to people who cannot pay. Also, the cost of credit card debt does not take into account the costs of securing other kinds of financing. That is, the instant availability of money through credit cards, and the associated costs, are balanced by the time and effort it would take to pay for it another way. There are other benefits, especially in security: over the years, people in fear of crime or other loss, have learned to avoid carrying cash. Credit cards also provide easy record-keeping with their statements, and recourse against transactions that are unsatisfactory, such as becoming an intermediary to secure refunds when products purchased do not perform as expected or promised.

There are two other important factors that put the rise in credit in perspective. First, household wealth continues to rise. Recent stock market gains have outpaced declines in the value of real estate.