Home»  Resources»  News Scan

News Scan March 2015

Credit Card News, Economy News, Banking Industry News - Mar 2015
10
MAR
  • Gallup's U.S. Economic Confidence Index registered -3 for the week ending March 8, the third consecutive week in negative territory after an eight-week run of positive weekly scores. The index is still significantly higher than it has been at most times since 2008.
  • Gallup's Economic Confidence Index is the average of two components: Americans' ratings of current economic conditions and their views on whether the economy is getting better or getting worse. The index has a theoretical maximum of +100, if all Americans believe the economy is excellent or good and getting better; and a theoretical minimum of -100, if all Americans say the economy is poor and getting worse.
  • Confidence recently reverted to negative territory, after two months of positive weekly scores. Prior to that, index scores had consistently been negative since Gallup began tracking economic confidence daily in 2008. Although the index had improved after bottoming out at -65 in October 2008, it did not register a positive score until late December 2014, after months of falling gas prices.
10
MAR
  • Data compiled by the Federal Reserve regarding the assets and liabilities of U.S. commercial banks shows that 2014 was the best period for the banking sector since the economic downturn in terms of loan growth.(Selected Assets and Liabilities of Commercial Banks in the United States, Federal Reserve Website) Banks saw their loan portfolios grow 6.8% over the year, as prevailing low interest rates and growing optimism about the strength of the economy coaxed individuals as well as businesses to tap into available credit lines.
  • The loan portfolio grew at a strong 8.2% (annualized) in Q2 2014 before slowing down to 5.4% by Q4. But the demand for commercial loans as well as personal loans (including automobile loans, student loans and other loans for discretionary-spending) remained notably high throughout the year.
  • Although there is no doubt about the brisk pace of loan growth for the industry as a whole over recent years, the loans haven’t grown uniformly across banks. Some banks have reported growth in outstanding loans of 4-5% annually while others have hardly seen any improvement in these figures as they run off loss-making loans handed out before the downturn.
10
MAR

America's skyrocketing credit card debt

Source: CBS Money News Category: Credit Card News
  • The U.S. economy may be strengthening, but by one measure Americans are flunking the basics of personal finance. Credit card debt is ballooning, leaving American households with a net increase of $57.1 billion in new credit card debt in 2014, according to a new survey from CardHub. The credit card comparison site said it's forecasting new credit card debt will rise 5 percent in 2015, reaching $60 billion this year.
  • While the increased spending could signal that Americans are feeling more sanguine about their prospects and the economy, it's also a cause for concern given that most workers aren't seeing the type of wage growth that would support that higher spending. The surge has left the average household credit card balance at almost $7,200, or not far from the $8,300 level that CardHub considers unsustainable.
  • We've now had six consecutive quarters of year over year increases in our credit card debt load, CardHub said in the study. "As a result, we must strive to remember the corrosive impact of debt on household finances during the recession and work to get out from under its influence before the burden becomes unbearable again."
03
MAR
  • Once again, the economy is confounding policy makers, pundits and the press by slowing down when it was expected to perk up.
  • After logging in 5% growth in last year’s third quarter, many thought that the economy would remain strong in the fourth, thus setting the stage for even faster economic growth in 2015. Yes, Virginia, this was supposed to be the best year since 2008. Too bad it’s not turning out this way.
  • Instead of growing 3% or better in the fourth quarter, the actual number hit the tape at 2.6% — and was subsequently revised downward to only 2.2%. Right away, the new year wound up with one strike against it, since the jumping off point for this year’s first quarter is now far below expectations.
03
MAR
  • Barclays Plc chief has threatened more cuts to its underperforming investment bank after a 750 million pounds charge by the British bank provided fresh evidence of the costs of past misdemeanours by its traders.
  • Barclays last year cut costs, improved its capital strength and shed unwanted assets, which he said justified his decision to accept his first bonus since taking charge three years ago – helping his pay for last year to more than treble to 5.5 million pounds.
  • But it continues to be dogged by past conduct problems and lacklustre returns in investment banking and Jenkins said on Tuesday he would take a knife once again to the investment bank arm if it does not improve its profitability.
02
MAR
  • Warehouse giant Costco announced Monday that it has entered into a new credit card program agreement with Citi and an incentive agreement with Visa.
  • Under the terms, Citi, the world's largest issues of consumer credit cards, would become the exclusive issuer of Costco co-brand credit cards. Visa would replace American Express as the credit card network for Costco in the U.S. and Puerto Rico beginning next month.
  • Costco and American Express were not able to renew their partnership, which was set to expire at the end of March 2016. The partnership dates back 16 years.