Consumer spending is down and credit card defaults are up!

“Consumers have thrown in the towel,” said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts, who correctly forecast the drop in spending. “They have no choice but to cut back on spending in a very big way. This is going to be a fairly deep, long recession.”

American Express is feeling the pain, as consumers stop spending — and stop paying their credit card bills.

American Express Co., the largest U.S. credit-card company by purchases, said yesterday it’ll slash 7,000 jobs as consumers spend less and defaults rise. Cardholders failed to repay loans in the third quarter at almost twice the rate of a year earlier, and the company set aside $1.4 billion for loan losses.

U.S. Consumer Spending Declined 0.3% in September (Update1) [Bloomberg]
(Photo: mirnanda )

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