7/7/09 – Market Moving News – Obama’s adviser calls for 2nd stimulus, consumer defaults reach record

July 7, 11:25 AMMiami Personal Finance ExaminerNeill Aarons

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The Stock Markets started the day lower after reports that an economic adviser to President Barack Obama on Tuesday said the United States should plan for a possible second round of fiscal stimulus in order to boost the economy.

Laura D'Andrea Tyson said the current $787 billion stimulus is "performing close to expectations but not in timing". Tyson emphasized she was speaking for herself and not the administration.

In a separate story Tuesday, reports of soaring U.S. unemployment and a shrinking economy drove delinquencies on credit card debt to an all-time high in the quarter ending March 2009.

Delinquencies on the value of all card debt soared to a record 6.60% from 5.52% in the fourth quarter of 2008, though the overall delinquency rate is believed to understate the problem because it excludes bank-issued credit cards, where credit deterioration was severe.

The American Bankers Association (ABA) reported that the rate of consumer loan payments at least 30 days late rose to 3.23% in the first quarter from 3.22% in the 2008 fourth quarter. Delinquencies were the highest since the ABA began tracking the data in 1974.

Late payments on home equity loans and credit lines set records, rising to 3.52% from 3.03% on loans and to 1.89% from 1.46% on lines of credit.

"The biggest driver is job losses," ABA Chief Economist James Chessen said in an interview. "When people lose their jobs or work fewer hours, it makes it that much harder to meet their obligations. Unfortunately, we're going to see higher job losses in the next year, and I expect elevated delinquencies."

At the printing of this note, The Dow Jones Industrial Average (DJIA) is down -69.00 points to 8255.87, a decline of 0.83%. The broader Standard and Poor’s 500 Index (S&P 500) is down -6.31 or -0.70% at 892.41. The Nasdaq, often used as a proxy for technology stocks, is down -15.16 points or -0.84% at 1772.24.