Nothing too exciting from American Express' (NYSE:AXP) earnings announcement yesterday. The company is holding up as well as you'd expect in this kind of environment.

Net income for the second quarter came in at $337 million, or $0.09 per share. That's down from the $0.56 per share it earned last year, but was skewed by a one-time charge related to the repurchase of TARP bailout funds. Ignoring the TARP repayments -- a more normalized look -- AmEx would have earned $0.27 per share. All things considered, that ain't bad.

The earnings report didn't get too far into default rates, but those numbers were released industry-wide last week. Here's that table if you missed it:

Bank

June Default Rate

May Default Rate

American Express

9.9%

10%

Bank of America (NYSE:BAC)

13.81%

12.5%

Capital One (NYSE:COF)

9.73%

9.41%

Citigroup (NYSE:C)

10.5%

10.5%

Discover (NYSE:DFS)

8.75%

8.91%

JPMorgan Chase (NYSE:JPM)

8.04%

8.36%

Default rates are primarily dependent on unemployment. Here, few see joblessness declining meaningfully for a while to come. As Fed chief Ben Bernanke put it earlier this week:

Although the unemployment rate is projected to peak at the end of this year, the projected declines in 2010 and 2011 would still leave unemployment well above [the Federal Reserve's] views of the longer-run sustainable rate. 

Some sort of a jobless recovery, in other words.

Furthermore, consumers obviously aren't spending like they used to. You can see this in the deterioration in charges in the second quarter:

Metric

Q2 2009

Q2 2008

Y-O-Y Change

Billed Business

$151 billion

$181 billion

(16%)

Average Spending Per Card Member

$2,712

$3,199

(15%)

What's important is whether these declines end up as a short-term dip, or a prolonged reset in consumer behavior. The jury's out on this one, and opinions vary wildly, but I side with it becoming a long-term trend. The depth of financial damage over the past year scars people for lifetimes, not months. Reverting to previous levels of spending seems as close to impossible as it gets. In fact, the drastic reduction in consumer credit virtually guarantees it.

Now add the two up: Annoyingly high unemployment coupled with depressed consumer spending not for months, but years. While AmEx seems fairly well-capitalized, you have to wonder if these factors justify a stock trading at what's essentially well over 25 times this quarter's normalized (and annualized) earnings.

Shares have tripled since March. It's been a heckuva fun ride. But investors would be wise to question whether things have gotten ahead of themselves.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. American Express and Discover Financial Services are Motley Fool Inside Value picks. The Fool owns shares of American Express and has a disclosure policy.