CreditForecast.com U.S. Consumer Credit Outlook. Scott Hoyt, PhD, Senior Director, Research Deniz Tudor, PhD, Director, Credit Analytics

Transcription

1 CreditForecast.com U.S. Consumer Credit Outlook Scott Hoyt, PhD, Senior Director, Research Deniz Tudor, PhD, Director, Credit Analytics

2 Speakers Scott Hoyt Senior Director Scott Hoyt is senior director for Moody s Analytics, responsible for the firm s consumer forecasts and analysis. Dr. Hoyt contributes to Economy.com, speaks at conferences, and oversees the production of the U.S. economic forecast. He has done custom modeling for credit and consumer sector clients. Deniz K. Tudor Director Deniz Tudor is a director with Moody s Analytics. Deniz specializes in U.S. consumer credit trends and leads the development of custom and industrybased econometric credit loss models for clients. Deniz is also responsible for product development, management and strategy, including data partnerships that expand the forecast capabilities of Moody s Analytics. U.S. Consumer Credit Outlook, August 15, 218 2

3 Consumers Relinquish the Lead Real, % change Spending GDP F 19F 2F 21F 22F Sources: BEA, Moody s Analytics U.S. Consumer Credit Outlook, August 15, 218 3

4 Wage Growth Looking Up 3-mo MA, % change yr ago Average hourly earnings Employment Wage proxy Sources: BLS, Moody s Analytics U.S. Consumer Credit Outlook, August 15, 218 4

5 Wages Driving Income Growth Disposable income, $ bil, change yr ago 1, Govt contrib. Other Wages Total F19F2F21F22F Sources: BEA, Moody s Analytics U.S. Consumer Credit Outlook, August 15, 218 5

6 Saving Won t Be a Drag Saving, % disposable income Current Prior Sources: BEA, Moody s Analytics U.S. Consumer Credit Outlook, August 15, 218 6

7 Dividend Income Led Upward Revisions Dividend income, $ bil Current Prior Sources: BEA, Moody s Analytics U.S. Consumer Credit Outlook, August 15, 218 7

8 Retail Pricing Power Better Than Thought Retail sales deflator, ex gasoline, % change yr ago, 3-mo MA Current Previous Sources: BEA, Moody s Analytics U.S. Consumer Credit Outlook, August 15, 218 8

9 Wealth Effect Starting to Fade Median home price, $ ths (L) Wilshire 5 Dec = (R) Sources: NAR, SIX Financial Information, Moody s Analytics U.S. Consumer Credit Outlook, August 15, 218 9

10 Household Burdens Remain Low % disposable income Financial obligations (R) Debt service (L) Sources: Federal Reserve, Moody s Analytics U.S. Consumer Credit Outlook, August 15, 218 1

11 Few Refis, but Cash Extracted 7, 6, 5, 4, 3, 2, 1, Refi app., 3/16/199=1 (L) % with cash out (R) Sources: Freddie Mac, Mortgage Bankers Association, Moody s Analytics Copyright Mortgage Bankers Association, Feb 213. All Rights Reserved U.S. Consumer Credit Outlook, August 15,

12 Lending Standards Being Tightened Net % tightening Credit card Auto Other non-mortgage Sources: Federal Reserve, Moody s Analytics U.S. Consumer Credit Outlook, August 15,

13 High Rates Threaten Big-Ticket Spending Real spending, % change yr ago Durables Nondurables Services F 19F 2F 21F 22F Sources: BEA, Moody s Analytics U.S. Consumer Credit Outlook, August 15,

14 Household Debt Sets a New Record* Total balance, $ tril $12.4 Real 26$, controlling for inflation Nominal $ Sources: CreditForecast.com, Moody s Analytics *In Nominal $ U.S. Consumer Credit Outlook, August 15,

15 Growth Expected to Continue Balances on open accounts, % change yr ago, 6-mo MA First mort Bankcard Heloc Retail Auto Student Cons fin F Sources: Equifax, Moody s Analytics U.S. Consumer Credit Outlook, August 15,

16 Revolving Credit Financed Spending New credit issuance, $ bil HELOC (L) Bankcard (L) CF revolving (L) Retail (L) Retail sales (R) 6,5 6, 5,5 5, 4,5 4, Sources: Equifax, Census Bureau, Moody s Analytics 3,5 U.S. Consumer Credit Outlook, August 15,

17 Originations Across Products Good Quality Total originations by credit score by qtr, accounts, mil, 12-mo MA , missing Sources: Equifax, Moody s Analytics U.S. Consumer Credit Outlook, August 15,

18 Credit Scores High but Differ Regionally Average Vantage Credit Score 218Q2 Sources: Equifax, Moody s Analytics U.S. Consumer Credit Outlook, August 15,

19 Improvement Not Uniform Across Products Annual change in total $ delinquency rate, 218Q2, bps Retail card Bankcard Cons. finance revolving Auto bank Auto finance HELOC Cons. finance installment All products HELOAN First mortgage Student loan Sources: CreditForecast.com, Moody s Analytics U.S. Consumer Credit Outlook, August 15,

20 Card Delinquencies Rise 9 days delinquent, % of outstanding balance, 12-mo MA Bankcard Retail card Sources: Equifax, Moody s Analytics U.S. Consumer Credit Outlook, August 15, 218 2

21 Retail Cards Expected to Stabilize Retail card outstanding $ by credit score, % change yr ago Total June-16 June-17 June-18 Sources: Equifax, Moody s Analytics U.S. Consumer Credit Outlook, August 15,

22 Retail Card Originations Stabilizing Origination volume by Vantage score 3., $ bil, 12-mo MA % >7 (R) Sources: Equifax, Moody s Analytics 65 U.S. Consumer Credit Outlook, August 15,

23 Auto Lenders Tightening Up Origination volume by qtr by Vantage score 3., $ bil % <62 (R) Sources: Equifax, Moody s Analytics U.S. Consumer Credit Outlook, August 15,

24 Consumer Default Volumes Stabilize Default balances, $ bil, 12-mo MA Student loan Residential total Retail CF total Bankcard Auto total Sources: Equifax, Moody s Analytics U.S. Consumer Credit Outlook, August 15,

25 Consumers Delay Pay Off Closed positives, % of $ balances, annual max First mortgage Consumer finance Auto total Student loan Sources: Equifax, Moody s Analytics U.S. Consumer Credit Outlook, August 15,

26 Q&A Additional questions? Send an to or contact: Deniz Tudor Director Upcoming CECL Events» September 2, 218 CECL Briefing Washington, D.C.» October 16, 218 CECL Webinar: Off the Shelf Modeling Applications U.S. Consumer Credit Outlook, August 15,

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