Consumers Use Credit Cards for Necessities as Inflation Cuts U.S. Incomes

[xchrom]

http://www.bloomberg.com/news/2011-07-21/consumers-in-u-s-relying-on-credit-as-inflation-erodes-incomes.html

Consumers in the U.S. are increasingly using credit cards to pay for basic necessities as income gains fail to keep pace with rising food and fuel prices.

The dollar volume of purchases charged grew 10.7 percent in June from a year ago, while the number of transactions rose 6.8 percent, according to First Data Corp.’s SpendTrend report issued this month. The difference probably represents the increasing cost of gasoline, said Silvio Tavares, senior vice president at First Data, the largest credit card processor.

“Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food,” said Tavares, who’s based in Atlanta. “That’s because there’s been no other positive catalyst, like an increase in wages, to offset higher prices. It’s a cash-flow problem.”

Rising costs of food and gasoline are leaving Americans less money to spend discretionary items, slowing the pace of the recovery, Tavares said. Household spending accounts for about 70 percent of the world’s largest economy.

[Selatius]

1. If we could implement a national program to create a mass transit system, we'd free up money.

The money being eaten up by gas would then be free to be used on other things, such as goods and services. This would only help the economy; plus, with a mass transit grid in place, it would help kick our addiction to oil and provide new jobs to both maintain and operate that transit infrastructure.

Instead, we waste all that money away on wars and idiotic tax cuts for the rich that don't pay for themselves. We're half-way towards doomed at this rate.

[ejpoeta]

4. we can't have that now can we. maybe that is why that story i heard about

where the infrastructure bill that had nothing for transit and walkers or bikers in it. all highways. can't remember anything else except that part. speaks volumes. keep us strapped to that gasoline. i feel there are forces within our own congress who don't want us to kick that habit.

[ixion]

2. uh "income gains"?

Oh, please.

There hasn't been REAL income gains since the 70's.

And the article fails to mention what the effect of this will be over the long term. That is: As soon as the CCards are maxed out, what then?

Change happens.

Instead, we're offered a bit of pablum by one of the people responsible for the Great Daylight Treasury Robbery:

Bernanke’s View

“The anticipated pickups in economic activity and job creation, together with the expected easing of price pressures, should bolster real household income, confidence, and spending,” Bernanke said.

This is, of course, complete and utter rubbish.

[canoeist52]

3. this low-income family is using them is saying "screw you" to the

banks and only using them for convenience for food and fuel. Then we pay it off every month.
Trying to use cash for everything else.

Bloomberg has no way to measure our cash flow and may have missed the point of our anger at the banks.

[Name removed]

5. Deleted message

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[dixiegrrrrl]

9. Exactly.

Increased use of credit cards over a year ago can be attributed to many things.
Including increase in online buying, for example.

In my rural isolated area, food prices are higher than in the cities, and much higher than in no tax state of Fla.
"next door" to us.
But since it would take at least 90 minutes to drive to any urban area with competitive prices,
plus 20.00 of gas, we are stuck with the higher prices AND the 9.5% sales tax on everything in our county.

But, if one buys online, many items are non-taxable and have free shipping.
Whip out the credit card, pay at end of month, save at least 10%, not to mention time and gas.

I wonder if the study quoted measured how many credit cards are being paid off each month?

[Mugweed]

6. It doesn't help if you lose your job or take a pay cut, either

Prices keep rising and salaries don't. I remember when my father could buy a house and raise 3 kids all on a blue collar salary. I have a college education and am in middle management in a white-collar job and I still can't afford the things he could. Meanwhile, the republicans are sipping $350 a bottle wine... They've finally beaten me down to the point where I say "At least I still have a job." The American Dream has been effectively killed. Remember when you were told that if you work hard and play by the rules, you'll be a success? They didn't tell you that the game has been rigged.

[Selatius]

8. From what I've seen, if you want to get ahead and make tons of money, you don't play fair.

You can make more money running guns or being a mercenary or being a corrupt banker than being an honest worker using his hands or mind. Basically, if you make it your life's work to screw over people or bring terror into their lives, you're going to get bags of cash, and if you don't, maybe you won't get bags of cash, maybe you will get them, but you'll be working a lot harder and a lot longer with a lot less time to enjoy the fruits of your labor than those who bent the rules to have things go their way.

By all means am I not saying we should break the rules and go crazy. What I am saying, however, is that in an environment where rules are constantly broken and are not enforced, don't expect much condemnation whenever a working class person does finally snap and decides it would be better to plant a bomb underneath the car of the banker who foreclosed on his home or decides to beat up the manager who laid him off.

[pinboy3niner]

7. "In the souls of the people the grapes of wrath are filling and growing heavy...

...growing heavy for the vintage."

- John Steinbeck, The Grapes of Wrath, Chapter 25

[Shandris]

10. But...but...but some jackass here was telling me yesterday that there IS no inflation!

That's why the Chained CPI is a good thing, because the COLA as it is now overstates inflation, and, well, we know the COLA isn't going up! :o

:sarcasm: