Fitch is out with a new report stating that credit card losses are set to soar in Q2. Fitch reports:
Recent revisions to unemployment expectations, following the unexpected pace of deterioration in the first quarter, indicate that significant pressure on card credit metrics will remain over the balance of 2009 and into 2010. Furthermore, net charge-off levels will be hurt by industry portfolio contraction, which will make trends in absolute dollar losses more useful in coming quarters.
I know I’ve really been hammering this point home lately, but it just can’t be overlooked. The consumer is weak and is not springing back to life any time soon. In this consumer driven economy you can practically guarantee that the economic rebound (assuming this is an actual rebound) will be mild based on the fact that the consumer is still saddled with credit card debt, up to their neck in mortgages (many of which are set to reset next year), losing jobs and earning lower wages. Not to mention the fact that the credit card debacle is becoming very messy for the bank balance sheets, but that’s a whole other topic….