This year was supposed to be a year of recovery after a lousy 2001, but the economy is sluggish at best. Mid way through 2002, employment is not growing and consumer spending is slowing, which means there may be rough road ahead for credit card issuers through the second half of this year. The Conference Board reported today that consumer confidence fell in June to 106.4, posting its largest one-month drop since the Sept 11th attacks. Meanwhile, Discover reported last week that its credit card outstandings fell 1.6% since February 28th, and that charging activity was flat compared to a year ago. Discover’s charge-off rate, or loss rate, hit 6.30% for the second quarter of this year, about 27% higher than last year. Other top issuers are expected to report similar trends when second quarter earnings reports come out in July. Due to continued weakness in the U.S. economy and the general credit deterioration, it is unlikely the Feds will raise rates before 2003. Some analysts are predicting a rate cut in the fall, if not sooner. One bright spot: bankruptcy reform. It appears that after a private meeting last week among several key House and Senate bankruptcy conferees that bankruptcy reform may be headed to the President’s desk soon. The conferees apparently reached some agreements in principle over what types of clinic protest-related judgments should be dischargeable in bankruptcy and which should not.