Credit Card Charge-Offs Increased In August

RENEE MONTAGNE, host:

And there's some more bad news for the banks behind credit cards. A new report from JPMorgan Chase finds that credit card-related losses for banks rose by about eight percent in August compared to the previous month.

NPR's Chris Arnold reports.

CHRIS ARNOLD: This week, Fed Chairman Ben Bernanke made headlines when he said that, technically speaking, the recession is very likely over. But he also said that it might not feel like that to many Americans any time soon, because the economy is still losing jobs. And these credit card defaults are directly linked to that. As more people get laid off, or get their hours cut back, they can't pay their credit cards. Nigel Gault is an economist at IHS Global Insight.

Mr. NIGEL GAULT (IHS Global Insight): People have lower incomes. They try to maintain their living standard, which means they've probably being trying to put a little bit more onto their credit card, and ultimately they can't bear the strain and so it leads to bigger write-offs.

ARNOLD: Gault says the rising credit card losses are also a sign of just how over-leveraged many Americans still are right now. In other words, they've just borrowed too much money.

Mr. GAULT: Absolutely, it's evidence that people are extremely stretched. It's going to really need to see some improvement in the labor market before the average person really feels that the recession is over.

ARNOLD: Gault says all this suggests that the consumer spending is not going to pick up that quickly and that the economic recovery is likely to be pretty sluggish, but Gault does expect to see some job growth getting underway around the middle of next year.

Chris Arnold, NPR News. Transcript provided by NPR, Copyright National Public Radio.