#yahoofinance #recession #earnings #creditcard
Bob Napoli, William Blair Co-Group Head of Financial Services and Technology, joins Yahoo Finance Live with his insights on what credit card companies’ earnings may tell us about a possible recession.
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BREAKING: Recession News
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Recession fears have been mounting in recent months as a result of a variety of economic indicators, including the ongoing trade war, slowing global growth, and potential interest rate hikes. However, while there are certainly reasons to be concerned about the state of the economy, one analyst believes that fears of an impending recession may be “overblown” due to the growth of consumer credit card debt.
According to a recent report by Bloomberg, consumer credit card debt has been on the rise, reaching a total of $870 billion in the second quarter of 2019. This marks a 5% increase compared to the same period the previous year, and it suggests that consumers are feeling confident enough to spend more on their credit cards.
While growing consumer debt levels can certainly be cause for concern, some analysts argue that it is also a sign of a healthy economy. According to Richard Bernstein, the CEO of Richard Bernstein Advisors LLC, the increase in consumer credit card debt is actually a positive indicator because it shows that people are willing and able to spend money. In an interview with CNBC, Bernstein stated that the amount of consumer credit card debt “is growing because people are using it and using it freely.”
Additionally, Bernstein pointed out that the growth in consumer credit card debt could be the result of consumers taking advantage of rewards programs and cashback incentives offered by credit card companies. This suggests that people are not only spending more, but they are also being more strategic in how they use their credit cards.
While it’s important to take economic indicators seriously, it’s also crucial to consider all the factors at play. In the case of consumer credit card debt, it appears that the increase in debt is not necessarily a sign that consumers are overextending themselves, but rather an indication that they are feeling confident about their financial situation.
Of course, it’s essential to keep a close eye on economic indicators and be prepared for any potential downturn. However, for now, it seems that the fears of an impending recession may be overblown, particularly when it comes to consumer credit card debt. As always, it’s important to stay informed and make wise financial decisions, but this particular aspect of the economy may not be as dire as some have feared.
So… we are assuming these consumers are aware of the economy and adjusting their lifestyle around that? Ignorance abounds. Do not assume those using credit cards are aware in any way. They just cannot control themselves.
That's a contradictory statement, people taking on more debt to keep their lifestyles is not good. And with interest rates quite high, these people must barely be able to make the minimum payments.
What is the percentage of people paying this debt off? That’s a missing metric.
Stupid analysis, Amex holders are not a representative sample since it's a high-end card. Food/lodging spend on CC is a really bad sign.
So, we will be able to carry higher Fed funds rate for longer then.
I'd wait for MC and Visa, AmEx I think is not a good indicator…
This is how a recession occurs, you ignore the signs and burry yourself with more debts
A year ago lots of restaurants were closed and people ate in more due to Covid
Are consumers really spending 25%+ more?
Or does everything just cost 25%+ more because of REAL inflation?
(as opposed to the cooked CPI numbers from the BLS)
My opinion is, these Fed rate hikes have not really kicked in yet as far as their affect – we are only in maybe the 1st or 2nd inning of their affect.
You people are either deliberately being misleading or utterly economically illiterate. Many VERY respected, non-partisan economists believe recession is already upon us. Couple that with RECORD inflation, massive job cuts left and right, historic price increases plus out of control government spending? And you still insult peoples intelligence by trying to lead anyone to seriously believe everything is rosy in the garden and no cause for concern really? Thats very irresponsible journalism – and I use that word very loosely here.
Overblown as debt grows? The gravy train of debt ends at some point