EconomicCrisis.US

Just call it “the sound of no cards swiping.” Americans are keeping their credit cards in their wallets. Balances on U.S. consumer credit cards in August fell at a 5.8 percent annual rate, or by $11.98 billion, the U.S. Federal Reserve announced Wednesday. It was the seventh consecutive monthly decline in consumer credit — a pattern that’s consistent with both the frugal-consumer trend in the U.S. and banks’ decisions to lower, or in some cases eliminate, credit lines in the wake of the financial crisis.

Economists surveyed by Bloomberg News had expected August card use to contract by $8.5 billion. Revised figures for July showed consumer credit plunged a bit less, by $19 billion, than the originally reported $21.6 billion. In August, total outstanding consumer credit, including revolving and nonrevolving credit, declined at a 5.8% annual rate, or by $11.98 billion, to a seasonally adjusted $2.46 trillion, the Fed said.
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U.S. holiday retail sales could fall for the second year in a row as rising unemployment and stagnant wage growth curb gift buying, according to a forecast released on Tuesday by a top industry trade group.

The National Retail Federation expects 2009 U.S. holiday sales, or retail industry sales in the months of November and December, to fall 1 percent this year to $437.6 billion. Last year, sales in the period fell 3.4 percent to $441.97 billion.

If the decline materializes, it would mark the first back-to-back drop since the group began tracking such figures in 1992, something NRF Chief Economist Rosalind Wells called “unprecedented.”
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The half-decade before the financial crisis was a go-go time for the global economy. Consumption reached unprecedented heights; so did oil prices and shipping rates. And that frantic buying and selling was a boon for manufacturing. As U.S. consumers flexed their credit cards for flat-panel TVs and video games, factories sprouted around the world to make all the stuff that was crammed into consumers’ SUVs. But amid the recession, spending has shrunk dramatically, as debt-laden U.S. consumers are learning to save — and those factories have a lot less to do. During the downturn, the rates at which industrial capacity was being utilized in the U.S. and Japan, the world’s two largest economies, plummeted to the lowest levels on record. In China, the world’s workshop, tens of thousands of factories making mostly low-end merchandise have shut down.
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U.S. job loss worsened in September, with 263,000 lost, moving the official unemployment rate from 9.7 percent to 9.8 percent and underlining how the nation’s economic crisis is a jobs crisis. The new data out today by the U.S. Department of Labor means some 15.1 million workers have lost their jobs since the recession began in December 2007.

The official 9.8 percent unemployment rate is bad enough, but a more realistic—and horrible—picture of what’s really going on in this nation is the unemployment data that includes those not counted in the official figure, such as those who have given up looking for work: That’s a stunning 17 percent unemployment rate—some 26 million workers who need jobs or full-time work but cannot find it.
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