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New data suggest the "freefall" in retail consumer spending through the first few months of this year is ending, Chris McWilton, U.S. markets chief at MasterCard Worldwide, said yesterday in New York during a conference Keefe, Bruyette & Woods sponsored. Data to be released next week by MasterCard Advisors, an independent advisory firm the card brand owns, will show "some abating" of the sharp overall decline in retail spending associated with the economic downturn, McWilton said. Specifically, spending in such "everyday categories" as grocery, fast-food and drug stores has stabilized, he said. But spending in discretionary categories, including home furnishings, appliances and luxury goods, continues to suffer, McWilton said. MasterCard sees "no significant difference" in credit card spending trends among revolvers who carry balances from month to month and transactors who pay off their card balances each month. Issuers are likely to see rising credit card losses throughout this year, along with unemployment rates, McWilton added. "We are seeing staggering amounts of credit (card) losses," he said, noting charge-off rates tend to track closely with unemployment rates, which could reach 10% later this year and as high as 14% in some U.S. regions. "The recovery is showing signs of life, but it will take awhile. The party went on for a long time, and the hangover will take as long or longer."
