This is predictable but still a bad sign for the economy. The tough times are spreading even to wealthier Americans.
Late Monday, New York-based American Express reported a 38% drop in second-quarter earnings and warned that it won't be able to meet long-term financial targets until the economy improves.
American Express shares, which are part of the Dow Jones Industrial Average fell to $37.12 in morning trading.
The company said that even its most creditworthy, long-standing customers felt the effects of the economic slowdown currently sweeping the U.S.
Without giving specifics, AmEx said it plans to cut staff and reduce other costs, noting that the resulting charges will hit results in the second half of 2008.
"With bad debt occurring even in the superprime card segment, AmEx's earnings clearly show that the credit crisis is going upscale, which does not bode well for the U.S. economy," Red Gillen, senior analyst at consulting firm Celent, commented via email.
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