As if we needed another reason potentially to suppress discretionary spending as we head into the holiday season, Yahoo! Finance last week reported that credit card debt and delinquency have surged.
According to the report, while overall household debt has decreased, that’s an apples to oranges comparison. That includes paying down mortgages, for example, and doesn’t reflect people using their credit cards to cover everyday items, which is on the rise as well.
The more concerning figures are that the Consumer Price Index is rising monthly–3.4% in July over 3.5% in June. Energy costs are up a whopping 14.%, and credit card delinquency of 90 days or more has risen steadily, even as interest rates have risen.
So, what does this mean for the toy biz? Well, on one level it supports the reports that what’s moving currently are less expensive toys (squish, collectibles) or higher-end toys (targeting kidults), but it’s also a canary inthe coal mine, after a fashion, that if the curren ttrends continue–and there’s no reason to think they won’t–consumers will have less to spend on the holidays.
Typically consumers are willing to go into debt to create the holidays, but the question is whether they are willing to incur new debt…and how much?
