Credit-Card Users Hurt at Gas Pump May Sap Retail Sales

by Mike Bevel, CollectionIndustry.com

It?s like the saddest game of dominoes, ever. Credit card users, maxed out paying for things like gas and food, may end up putting the hurt on U.S. retailers ? and just in time for the beginning of the holiday season.

Consumers are relying on credit cards more for essentials than luxury incidentals. With credit limits near the breaking point, fewer consumers will find themselves able to charge things like new televisions, DVRs, iPods, laptops, or the complete second season of Lost. (Don?t tell me what?s in the hatch yet. I?m not ready to know.)

?Consumers have been spending beyond their means,’ economist Bill Hampel at Credit Union National Association, a trade group in Madison, WI, told Bloomberg.com. ?Retailers will be sailing into the wind.”

When consumers start claiming to be ?spent out? ? that?s when retailers will start worrying.

The Bloomberg.com article goes on to suggest that some retailers may already be feeling the early pinches of consumer disinterest. Home- improvement retailers Home Depot Inc. and Lowe’s Cos., warehouse club Costco Wholesale Corp., and home furnishings retailer Williams-Sonoma Inc. in August tempered their annual profit outlooks on concern that consumer demand will slow. Wal-Mart Stores Inc., the world’s largest retailer, said third-quarter earnings may trail analysts’ estimates.

?If the consumer is stretched out before we even get to the holiday season, that’ll be a concern,” said Patricia Edwards, who helps manage $8.2 billion at Wentworth, Hauser & Violich, which owns retail stocks including Target Corp.