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February 5, 2010

  • U.S. Spending and Unemployment Outlook, Pt.2
      It's a long journey to trusting.

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    Rising concern over the U.S. high unemployment rate, plays a vital role in Americans' decision making process to reduce credit card spending. Statistics have proven that credit card delinquencies typically run parallel to the unemployment rate giving validity to these consumer concerns. According to the U.S. Labor Department in Washington D.C., in December the nation's unemployment rate exceeded 10 percent as the country lost an additional 150,000 jobs. The figure brings the nation's total job loss during the recession to nearly 8.4 million. However, the Labor Department's reported that the nation felt some relief as unemployment fell to 9.7 percent during the month of January, the lowest since August which may have contributed to the slight decrease in consumer credit card spending.

    Labor Department figures also indicated that U.S. manufacturers stepped up hiring for the first time in three years which is likely contributing to the minor decrease in credit card spending. As things begin to look up for the U.S. and the S&P realizes small gains, European countries have also achieved modest gains as a solution to the budget deficits of Greece and Spain may soon be realized. Credit card companies are optimistic about the economic events. American Express's CEO, Chenault, said that it looks as though economic recovery has begun in the U.S. and although modest, the company expects it to continue.

    The Commerce Department reported that the U.S. economic growth increased between October and December by 5.7 percent, the fastest gain in six years. If true, increased signs of economic recovery would certainly be an incentive for Americans to begin pulling out those credit cards once again. However, it will continue to be difficult for many consumers to begin trusting big banks and retailers again. Some experts say it will take Americans a very long time to get there; after all, the nation has seen the longest running decline in consumer spending since the Feds began keeping records in 1968.

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