Credit Card Companies Signaling That Consumer Spending Is Slowing
Retailers had already reported that sales were slower than expected during the holiday season. Now credit card companies are saying the same thing, a slowing in spending and an increase in late payments.
It also seems that high energy prices are finally catching up with the economy. No matter how much people want to cut back on spending at the gas pumps, they’re daily commute isn’t going to change.
Analysts say that people aren’t using less gasoline, they’re just paying more for it. So, basically many consumers now have less disposable income for other segments of the economy.
We haven’t even seen how high the price of gas will rise yet. The price of a barrel of oil rose about 60% last year, an increase that hasn’t fully translated to the pumps yet. When that happens, you can expect consumer spending to fall even further.
While the price of oil has retreated somewhat after breaking the $100 barrier, inflation concerns still hound the economy. The price of gold broke the $900 barrier for the first time recently and other commodities are also trading at near record highs.
With reports that the economy was slowing last quarter, this could be a painful double whammy for consumers if the economy does sink into a recession.Â
June 6th, 2008 at 10:42 pm
[…] Banks.com’s Weamein Yee posted an interesting personal finance article recently on how consumer spending is slowing across all sectors. One of those sectors, of course, is credit cards. Even despite recent reports that American consumers were prioritizing credit card bills above mortgage payments, it seems the credit card industry is not immune to the current economic pressures. Companies are reporting less consumer credit card spending and more late payments. […]