February 8, 2008
Welcome to the recession. Credit-card defaults are soaring, trailing after mortgage defaults by six to nine months. In December, 7.6% of all credit-card debt outstanding was in default and that number is rising each month. More incredibly, looking at the data today, Americans owe close to $1 trillion to their credit-card companies – at rates of interest as high as 30% annually! Considering that, on average, Americans don't save any of their incomes... how do these credit-card companies expect to be repaid?
Plummeting sales at low-end family restaurants. Chili's restaurants' parent company says: "We are operating in one of the toughest environments in our company history." Starbucks has seen sales decline 3%.
Wal-Mart reports that shoppers are spending gift cards on socks and diapers, instead of CDs and iPods. This news comes as retailers posted the worst January in almost 40 years. "It shows you the level of worry. Even with free money in your hand, (consumers) aren't willing to spend on anything more than necessities," said Michael P. Niemira, chief economist at the International Council of Shopping Center.
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