First Data Corp.’s Spend Trend report has revealed that consumers in the U.S. are increasing their use of credit cards to pay for gas and other basic necessities. The report found that inflation has created a significant jump in prices for food and fuel while income has failed to keep pace.
Credit-Based Purchases Increased 10.7 Percent
The report revealed the dollar volume of credit-based purchases charged grew 10.7 percent in June from one year ago, which represents a very significant jump. Single transactions also grew drastically in this timeframe. According to First Data Corp., the number of transactions in June rose 6.8 percent from a year prior.
Silvio Tavares, senior vice president at First Data, revealed in a Bloomberg report that the large increase probably represents the increase in gas costs over that time span. “Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food,” Tavares told Bloomberg.
He went on to explain that the lack of wage increases or other options to offset higher prices has left consumers with a cash flow problem. Currently, they feel credit is the only way they can solve it.
Inflation Slowing Pace of Economic Recovery
Household spending is said to account for about 70 percent of the U.S. economy. This means with rising costs of food and gasoline leaving Americans with less money to spend, the pace of economic recovery is slowing.
According to figures from the Commerce Department, after-tax income adjusted for inflation dropped 0.1 percent from January through May. This drop was largely due to an 8.2 percent increase in energy costs and a 2 percent jump in food costs over the same period.
As noted by Tavares, the volume of gas purchases placed on credit cards increased 39 percent in June from a year prior while food purchases went up 5 percent. After seeing the nation’s credit card debt drop earlier this year, it could very well increase for the long run if prices don’t come down.
With economic recovery slowing and the likelihood of add income getting slimmer by the day, it’s up to the consumer to make adjustments necessary to fund basic necessities. If you find you are in a tough financial predicament but want to reduce credit use, explore different ways to save money in all areas of your life.
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“Household spending is said to account for about 70 percent of the U.S. economy.”
Hee.Hee.
And the governemnt accounts for the other 90%.
When I started looking into where the money was coming from to buy off the politicians and subvert the immigration laws of the world, I came across what may be the root of many of our problems. Fiat Money.
No matter how much real money people can put together to build their countries the way they want there are those that can print up what ever it takes to get their way.
Maybe this will help make the danger of fiat money clear.
Imagine you and me are setting across from each other. We create enough money to represent all of the world’s wealth. Each one of us has one SUPER Dollar in front of him.
You own half of everything and so do I.
I’m the government though. I get bribed into creating a Central Bank.
You’re not doing what I want you to be doing so I print up myself eight more SUPER Dollars to manipulate you with.
All of a sudden your SUPER Dollar only represents one tenth of the wealth of the world!
That isn’t the only thing though. You need to get busy and get to work because YOU’VE BEEN STIFFED with the bill for the money I PRINTED UP to get YOU TO DO what I WANTED.
That to me represents what has been happening to the economy, and us, and why so many of our occupations just can’t keep up with the fake money presses.
[...] Gas Prices, Inflation Contribute to Increase in Credit Use – Go Banking Rates – gobankingrates.com 07/23/2011 Go Banking RatesGas Prices, Inflation Contribute to Increase in Credit UseGo Banking RatesMaybe this will help make the danger of fiat money clear. Imagine you and me are setting across from each othe more… RSSdoodle by The Lessnau Lounge. Results provided by Google News. [...]