"Insanity is doing the same thing over and over again and expecting different results."
-- Albert Einstein

I can pretty much say without question that Americans are insane. Either that or we have the attention span of a goldfish.

I'd like to think that we take the lessons we've learned from previous recessions and utilize that knowledge so we don't fall into the same problems again. That's what I'd like to think...but that's not exactly how the world works.

According to data released this week, consumer borrowing jumped dramatically for the second straight month. Figures from the Federal Reserve noted a $19.3 billion jump in December, which followed an even larger $20.4 billion rise in November. A rise around Christmas isn't all that unique, but the magnitude of the increase is huge -- the two largest monthly increases in a decade.

anImage

Source: Federal Reserve.

Christmas-induced credit debt increased by $2.8 billion -- again, more or less expected. The real shock was the $16.6 billion increase in auto and student loans. Apparently historically high unemployment rates aren't enough to scare people off from purchasing a new vehicle. In fact, a poor job market appears to be influencing people to go back to school now more than ever.

What's alarming is that borrowing rates are rising again and are nearly back to their pre-recession levels, yet consumer wages haven't kept pace with inflation even at its depressed levels. Take a look at this side-by-side comparison to see why I'm so concerned:

Year

Average Hourly Earnings Percentage Increase

Annual Inflation Rate

2007 3.26% 2.85%
2008 3.53% 3.85%
2009 1.82% (0.34%)
2010 1.70% 1.64%
2011 2.06%* 3.16%

Source: Bureau of Labor Statistics, *Preliminary figure from BLS.

Higher levels of spending could denote consumer confidence in a rebounding economy. Then again, I'm more inclined to believe consumers simply didn't learn their lesson and are trying to do more with money they simply don't have. Federal Reserve Chairman Ben Bernanke has to take this rise in consumer borrowing as bittersweet; consumer spending drives 70% of all economic activity, yet consumer debt is a large reason why we dipped into recession in the first place. It's the catch-22 to end all catch-22's.

Of greater concern are the still-high levels of consumer delinquency rates. You would think that historically low lending rates would facilitate the restructuring of loans and prevent high levels of delinquencies, but the tightness of banks to lend and restructure has, for lack of a better word, mucked everything up. Take a look at residential mortgage delinquency data and you'll understand why I don't think we're out of the woods just yet.

anImage

Source: Federal Reserve.

As you can see, delinquency rates are declining, but at a very slow pace. Many of our nation's largest financial institutions are still dealing with the repercussions of consumers' poor borrowing habits (and to some extent banks' poor lending habits). Bank of America (NYS: BAC) has yet to completely put its Countrywide Financial mortgage fiasco completely behind it. Just last week New York Attorney General Eric Schneiderman filed a lawsuit against Bank of America, as well as JPMorgan Chase (NYS: JPM) and Wells Fargo (NYS: WFC) for using an electronic mortgage database that allegedly resulted in deceptive and illegal practices. Don't be fooled by yesterday's $25 billion settlement on foreclosures. It's quite possible U.S. financial institutions will be dealing with mortgage lawsuits for the better part of a decade before everything is all said and done.

All of this would be a moot point if Americans were saving money. But if that were the case I wouldn't be writing this article now would I?

anImage

Source: U.S. Department of Commerce, Bureau of Economic Analysis via St. Louis Federal Reserve.

Not only have personal savings been more or less heading lower for the past 30 years, but the November reading from the St. Louis Federal Reserve notched the lowest level of personal saving since December 2007. The catch-22 of exceptionally low lending rates is they do little to entice consumers to put their money to work in traditional money-making safety nets like savings accounts and bank CDs.

Fool colleague Morgan Housel painted a different picture last week after the January jobs report crushed Wall Street's expectations. The figures he alludes to do indeed point to the early stages of a recovery. The question I have is: Do the figures I have here point to the beginning stages of one final recessionary dip? If inflation keeps outpacing wages and borrowing continues to rise, I see it as inevitable.

What do you think? Let your fellow Fools know using the comments box below.

At the time this article was published Fool contributor Sean Williams owns shares of Bank of America, but has no material interest in any other companies mentioned in this article. He saved more last year than ever before. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Wells Fargo, as well as a covered strangle position on Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that's always looking out for its readers.

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