Empty Plastic (XLY, XRT, XLF)

Michael Panzer: While economists and the mainstream media tried hard to get everyone excited by today’s “better-than-expected” employment report (which included an unusually large and likely-to-be-reversed spike in hiring in the “Couriers & Messengers” category), they failed to mention one thing: even if they’re are a few more jobs around, that doesn’t necessarily mean Americans are going to go out and start buying stuff.

For one thing, they have a lot of other obligations to take care of first.

As Card Hub CEO Odysseas Papadimitrioas seems to make clear in a CNBC Guest Blog post, “Break Out the Budgets, Study Reveals US Consumers Increasingly Overleveraged,” U.S. consumers haven’t made any real headway when it comes to paring down high debt loads and getting their financial houses in order.

During the third fiscal quarter of 2011, U.S. consumers (NYSEARCA:XLY) added $17 billion in new credit card debt, wiping out what remained of a $33 billion first-quarter pay down and putting us on pace for a $64 billion net gain in credit card debt during 2011, according to a Card Hub study.

First-quarter debt pay downs are typical, as the first fiscal quarter of the year is when companies give out yearly salary bonuses, the IRS serves up tax refunds, and we’re still committed to New Year’s Resolutions. But in neither 2009 nor 2010 was a first-quarter pay down consumed entirely by the close of the year’s penultimate quarter. What’s more, according to the aforementioned study, the amount of new credit card debt incurred during Q3 2011 was 58 percent and 154 percent higher than what was added during Q3 2009 and Q3 2010, respectively.

These trends clearly display that overleveraging of unsecured credit cards is getting out of hand. This may not pose an immediate threat, but what happens if the European debt crisis sours and unemployment starts to go back up?

Indeed, a separate report from Reuters, “Holiday Hangover Means Slow 2012 Start for Stores,” pretty much confirms that the only thing many people seem to have in their wallets nowadays is overused plastic, along with the receipts for things they can’t afford (and the uncomfortably large balances they’re carrying on their credit card accounts).

U.S. retailers (NYSEARCA:XRT) are facing their biggest post-holiday depression since 2009 as consumers wary about the economic outlook cut back on spending to pay off credit card bills accumulated last month.

“The first and second quarters this year will see a deeper low than last year. Sales in the week after Christmas were so strong that took a bite from January,” retail consultant Jan Kniffen told Reuters.

…

As shoppers felt more confident about their finances (NYSEARCA:XLF) and shopped more online, credit card usage rose after three years of major cutbacks in credit card use, a study by the America’s Research Group showed.

“January post-holiday sales are expected to plunge to some of the lowest levels in years, thanks to a surge in credit card spending over the Christmas season,” said America’s Research Group Chairman Britt Beemer.

Beemer said credit card usage this year was up around 25 percent over last year.

“Now that those credit card bills are hitting mailboxes,” shoppers will cut back in a very significant way relative to January and February of the last few years,” Beemer said.

That said, the retailing sector was higher today, so I guess the “smart money” knows something we don’t.

Or do they?

Courtesy of Michael Panser

Posted with permission of author by Wall Street Sector Selector