2009: Credit Cards and California

From Welcome to 2009, here is more supporting information for the downtown.

• * Credit Card Debt and Credit Contraction
• * Reduced State/Government Tax Revenue
  
  
  2009-05-10: Credit card losses
  Mr. Ward lost his job at a retail warehouse in April and so far has managed to make minimum payments on his credit card debt, which he estimates at $15,000 to $20,000. Asked if he thinks he will be able to pay off his balance, he said, “Not unless I win the lottery.”
  
  In the meantime, he said, “I’m just doing what I can.”
  
  Even if Mr. Ward can pay off his debts, experts predict that tens of thousands of Americans will not be able to, leaving a gaping hole at ailing banks still trying to recover from the housing bust.
  The bank stress test, released last Thursday, found that the nation’s 19 biggest banks could expect nearly $82.4 billion in credit card losses by the end of 2010 under what federal regulators called a “worst-case” economic situation.
  
  But if unemployment breaches 10 percent, as many economists predict, the rate of uncollectible balances at some banks could far exceed that level. At American Express, Citigroup, and J.P. Morgan Chase, one-fifth of the credit card balances are expected to go bad over the next 20 months, according to stress test results. At Bank of America and Wells Fargo, about a quarter of card loans are expected to sour.
  
  (hat tip to Exurban Nation)
  2009-May: CA State Revenue in April 2009
  * The State’s revenues continued to deteriorate in April. Total General Fund revenues were down $1.89 billion (-16%) from the latest estimates found in the 2009-10 Budget Act.
  * Personal income taxes were $1.06 billion below the estimate (-12.6%), corporate taxes were below the estimate by $831 million (-35.6%) and sales taxes lagged the estimate by $108 million (-19.9%).
  * Compared to April 2008, General Fund revenue in April 2009 was down $6.3 billion (-39%). The total for the three largest taxes was below 2008 levels by $6.3 billion (-40.3%). Sales taxes were $452 million lower (-50.9%) than last April, and personal income taxes were down $5.7 billion (-43.6%). Corporate taxes were $142 million below (-8.6%) April of 2008.
  * Sales tax collections year to date are short $327 million (-1.8%) from the 2009-10 Budget Act. Income taxes were $653 million lower (-1.7%) than expected, and corporate taxes were $788 million lower than expected (-9.5%). The State’s other revenue streams were $299 million below (-6.7%) the estimates.