After the close today, credit card company and Dow Jones constituent American Express (AXP) put out a startling press release. In it they said that American Express card member spending began to slow and delinquencies and write offs trended up in December.
Worldwide card member spending increased 13%, excluding currency effects, in the 4th quarter but trailed off to only 10% in December “with particular weakness in US billings”. The CEO even went so far as to single out weakness in California, Florida and other parts of the country affected by the housing bust.
Delinquencies on US card balances also increased from 2.9% to 3.2% and write offs increased from 3.7% to 4.3% in the 4th quarter (American Express Delinquency and Charge Off Rates Historical Chart).
This is another compelling piece of evidence that consumer spending is slowing and that US consumers are feeling the pinch from the housing bust. I’d guess that this is going to have a pretty sizable negative effect on stocks when they open for trading tomorrow.
Disclosure: Top Gun has no position in American Express (AXP)