"People on the margin are putting necessities on their credit cards and this is a trend that's very consistent with what lower-end retailers have been saying about their paycheck cycles," Rosenberg said.
'Cash-Strapped'
Core customers of Bentonville, Arkansas-based Wal-Mart Stores Inc. are "cash strapped," William Simon, U.S. stores chief, said at a June 15 conference hosted by William Blair & Co. "The paycheck cycle is severe."
Similarly, customers of Matthews, North Carolina-based Family Dollar Stores Inc. are living "paycheck-to-paycheck," so when gas or food prices go up, "they don't have the cushion that many others might have," Chairman and Chief Executive Howard Levine said on a June 29 conference call.
Changes within the industry may account for some of the recent stabilization in outstanding revolving credit as several banks have ended incentive programs for debit cards, while increasing credit-card solicitations this year, Tavares said.
A possible bright spot is that inflation may moderate as prices of commodities stabilize, Fed Chairman Ben S. Bernanke said July 13 in his semi-annual testimony to Congress. As of July 19, the average price of a gallon of unleaded gas had dropped 7.6 percent from May 4, when it reached an almost three- year high.
Bernanke's View
"The anticipated pickups in economic activity and job creation, together with the expected easing of price pressures, should bolster real household income, confidence, and spending," Bernanke said.
Confidence has a long way to climb for those in the lower- income brackets. The sentiment gauge for those making less than $15,000 a year was minus 66 in the week ended July 10 and was minus 69.6 for those earning $15,000 to $24,999, according to the Bloomberg Consumer Comfort Index. The comparable reading for households making more than $100,000 was minus 1.4.
"For people to think that this rebound in credit-card usage is actually a sign of resurging consumer confidence, I think they're looking at the situation backwards," Rosenberg said.