{"id":11514,"date":"2023-11-09T07:19:06","date_gmt":"2023-11-09T07:19:06","guid":{"rendered":"https:\/\/infundpros.com\/markets\/credit-card-auto-loan-stress-rises-as-u-s-consumers-fall-behind-on-payments\/"},"modified":"2023-11-09T07:19:07","modified_gmt":"2023-11-09T07:19:07","slug":"credit-card-auto-loan-stress-rises-as-u-s-consumers-fall-behind-on-payments","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=11514","title":{"rendered":"Credit-card, auto-loan \u2018stress\u2019 rises as U.S. consumers fall behind on payments"},"content":{"rendered":"
\n

Consumers are showing some signs of stress even as the unemployment rate \u2014 at least for now \u2014 remains historically low, according to Renaissance Macro Research.<\/p>\n

\u201cCredit quality is worsening,\u201d said Neil Dutta, head of economics at RenMac in a note Wednesday. He pointed to a modest deterioration in credit quality for credit cards and auto loans, citing the Federal Bank of New York\u2019s most recent household debt and credit report.\u00a0<\/p>\n

\n

The portion of auto-loan balances that are \u201cseriously delinquent,\u201d meaning payments are late by at least 90 days, jumped to 2.53%, said Dutta. That\u2019s the highest since the third quarter of 2010, he said, while \u201cseriously delinquent\u201d credit-card balances increased to 5.78%.\u00a0<\/p>\n

As more consumers struggle to keep up with payments on credit cards and auto loans, these two areas of consumer debt are seeing more \u201cstress\u201d than mortgages, the RenMac chart below shows.\u00a0The yellow line tracks the jump in seriously delinquent credit-card balances, while the gray line represents the rising portion of such late auto-loan payments.<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n<\/figure><\/div>\n

\u201cAs with unemployment, the risk with delinquencies are non-linear,\u201d said Dutta. \u201cIf unemployment jumps, credit will continue to deteriorate.\u201d<\/p>\n

The U.S. unemployment rate rose to 3.9% in October, from 3.8% in September, according to a Department of Labor report earlier this month. Still, the unemployment rate remains relatively low, even as jobs growth in the labor market slowed last month and the Federal Reserve maintains interest rates at an elevated level that Fed Chair Jerome Powell views as restrictive.<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n<\/figure><\/div>\n

\u201cYounger age cohorts are seeing the sharpest increase in delinquency rates,\u201d said Dutta.<\/p>\n

But the percentage of \u201call debt balances that are seriously delinquent stood at just 1.28%, well below the pre-pandemic rate of 2.38%,\u201d he wrote. \u201cMortgage loan balances that are seriously delinquent remain pinned to the floor.\u201d<\/p>\n

The stock market is watching consumers\u2019 financial health, as their spending has helped the U.S. economy chug along despite the Fed keeping its benchmark rate at the highest level in 22 years to fight inflation.\u00a0<\/p>\n

U.S. stocks have been on a winning streak this month as yields in the Treasury market fell, although the S&P 500 index on Wednesday afternoon looked like it could snap its longest stretch of daily gains in two years. The Dow Jones Industrial Average
\n DJIA
\n was trading 0.2% lower on Wednesday afternoon, while the S&P 500
\n SPX
\n and Nasdaq Composite
\n COMP
\n each slipped less than 0.1%, FactSet data show, at last check.\u00a0\u00a0<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Consumers are showing some signs of stress even as the unemployment rate \u2014 at least for now \u2014 remains historically low, according…<\/p>\n","protected":false},"author":1,"featured_media":11515,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[],"class_list":{"0":"post-11514","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets"},"yoast_head":"\nCredit-card, auto-loan \u2018stress\u2019 rises as U.S. consumers fall behind on payments | inFundPros<\/title>\n<meta name=\"description\" content=\"Consumers are showing some signs of stress even as the unemployment rate \u2014 at least for now \u2014 remains historically low, according to Renaissance Macro\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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