Consumers may have continued to shop this past holiday season, but much of the buying was done, as before, with credit created out of thin air. We are now learning that U.S. Retail Credit Card Defaults Hit Near-Record Levels with No Relief in Sight:

U.S. consumers defaulted on store-branded credit cards at near-record levels during the holiday shopping season, with 2010 likely to bring more of the same trend, according to Fitch Ratings.

Fitch’s December Retail Credit Card Index results show that more than one in every eight dollars of receivables was written off as uncollectable during the November collection period on an annualized basis. Taken with the recent delinquency trends and Fitch’s expectation for unemployment, Fitch expects retail card chargeoffs to remain elevated throughout first half-2010.

“We do not foresee any meaningful improvement in the retail card credit quality in the coming months,” said Managing Director Michael Dean. “U.S. consumers remain under stress on a number of fronts, most notably on the employment front, and retail card chargeoffs will continue to reflect those pressures.”

As Fitch suggested, this trend is going to continue. And those consumers that have already defaulted, and will continue to default throughout 2010 will not have store branded credits cards to shop with next year. Even though we are in a depression, referred to by most as a recession, some consumers still don’t get it. But before this is all said and done they assuredly will.

Credit card defaults are reaching record levels, banks are lending significantly less to retail customers than they did just a couple years ago, and those that do acquire any sort of credit have to pay exorbitant interest rates. All of this spells disaster for consumer credit markets and all of the businesses that make money as a result of the spending those credit cards enable.

With credit gone, jobs continuing to contract, albeit at a “slower” pace, and wages being deflated as businesses struggle to stay alive, where will consumers acquire the money for continued spending?

President Obama said in his State of the Union that we have successfully avoided depression. We respectfully disagree.

You may remember that President Hoover said, “the depression is over,” in June of 1930.

It continued on for another ten years.