The more people spend money that they have. Debt-financed spending means that future money is not going toward goods and services.
Investment is a good thing to have, too:
GDP = Consumption + Gross Investment + Government Spending + Trade Surplus/Deficit
Paying back of credit card debt (at least principal) doesn't fall into this equation. The interest falls into the Consumption category (paying for a service). That's why consumer debt adversely hurts GDP when out of control.
> Debt-financed spending means that future money is not going towards goods and services.
This is a major hole in my current understanding of economic theory. My gut reaction tells me that being in debt should be bad but if you think about it, it's really a good place to be. If the general monetary supply is inflationary, then money you owe is gradually losing value. Which is an excellent proposal for those in debt: do nothing and wait, and you will owe less material value. So when you say that "future money is not going towards goods and services" I am at least a little OK with that, because future money isn't worth as much as money today, in actual fact.
Interest usually fixes that equation nicely. Typically inflation is 2-3% and right now the cheapest money you can get is around 4%. So even with inflation factored in holding onto your debt will cost you more then paying it off right away.
I can only borrow money (or sell stock in my company) if someone else is willing to save (or invest). A healthy economy requires a balance between borrowers and savers.
Investment is a good thing to have, too:
GDP = Consumption + Gross Investment + Government Spending + Trade Surplus/Deficit
Paying back of credit card debt (at least principal) doesn't fall into this equation. The interest falls into the Consumption category (paying for a service). That's why consumer debt adversely hurts GDP when out of control.