Now, it is trending higher and needs to be watched but last current levels, there is little to worry about regarding the consumer.
“Davidson” submits:
The history of delinquency rates indicates that consumer more than business financial stress is the key to anticipating recessions. When the consumer over-spends and begins to be delinquent in payments, this represents the primary financial stress indicator at 4.7% for Credit Card lending and 3.5% for Consumer Loans. Once consumers show this general level of delinquency, lenders become more selective and stop extending credit to those who fail to pay Delinquencies for Credit Cards are reported at 3.1% and for Consumer Loans 2.62% vs the past danger-levels of 4.7% and 3.5% relatively.
I am sounding like a broken record with the continued market concern expressed in the headlines daily. The bottom line is that if consumer delinquencies remain below the relative benchmark threat- levels, lenders write-off bad debts as part of normal business and keep lending till delinquencies reach breach these threat levels. We remain well below the levels that forced lenders to retrench in prior cycles leading to recession. It appears we may have 2yrs-3yrs before this is a worry.
No recession in sight from a financial stress perspective.
