Credit Cards and Unemployment

From Fitch via FT, we learned yesterday that credit card delinquencies reached a record high in January and that further deterioration is likely as the economy slows and unemployment rises. Payments at least 60 days late climbed nearly 0.5% last month to a record 3.75%. Charge-off rates in January came in 40% higher than a year prior at 7.5% and are projected toward 9% during the second half of this year. Late payments and defaults on credit cards have been closely linked with levels of unemployment, which have risen dramatically, you may have noticed.

Speaking of unemployment, investors expect today’s report to show at least another 500,000 jobs lost in January and for the unemployment rate to tick up to 7.4%. On the chart below, from Arthur Hill’s Daily Swing at TDTrader.com, you’ll notice how deep that keeps the hole we’re in — and how directly correlated the employment situation is with the S&P; 500:


Now, per the post directly below, do you think this makes the recent sideways action more likely a base from which to rally or a shelf from which to fall?

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