After lugging a sleigh full of Wiis and Hannah Montana dolls across the sky, the reindeer are due for their annual checkup. Dasher, Dancer, Prancer and Vixen--otherwise known as Discover, Diners Club, PayPal and Visa--have been pulling increasingly huge loads in recent years, and this year was no exception. On Tuesday MasterCard Advisors reported that US holiday sales were up 3.6 percent from 2006. That our plastic reindeer carried such a heavy load through the blizzard of a mortgage crisis is a testament to the power of Rudolph and his nose of red. But is the Red-Nosed Reindeer running his team into the ground?
What's clear is that consumer debt is taking a red nose dive. This week the AP reviewed financial data from the nation's largest card issuers and found a steep rise in delinquencies among accounts more than 90 days in arrears. Some of the nation's biggest lenders reported the accounts have ballooned more than 50 percent compared to a year ago. Overall, defaults jumped by 18 percent.
Rudolph (and Santa) really are to blame for a lot of this. For most of this year consumers seemed to be coming to their senses. The national savings rate was positive for most of 2007, for the first time in years, but then it jumped back to negative leading up to the holidays. For the time being we're once more following Rudolph back to 1929. His flashing red nose is certainly comforting, but it's also why people used to call him names, and wouldn't let him play in any reindeer games.