These were pointed out on Twitter by an account I follow. They are a bit of a permabull but some of the datapoints are very insightful.
Today was the KBW Fintech Payments Conference, and Visa, Mastercard, and Discover Financial Services all spoke to the press.
No sign of pessemism here. Credit card delinquency rates normalizing but nothing too serious.
Meanwhile the tax man continues to collect growing amounts of income. And in fact, the poorest Americans have seen the biggest relative gains: figure. Inequality is falling?
Strong spending on restaurants: “7.2% gain in restaurant retail sales in January was strongest since March 2021 … before pandemic, we’ve never seen that kind of strength.” Source.
Data from previous posts of mine:
Household interest payments as a share of income
Household debt to GDP by country over the last 3 years
Student loan debt / autos are a relatively small portion of household debt. It's still mostly mortgage debt like it has always been.
House prices in the US a lot less crazy than countries like Canada
US mortgages are generally not variable rates. Compare the US to Sweden!
Household savings/balances relative to 2019 levels, stratified by income levels
Revolving debt (credit cards) as a share of income
So, no, don't fall for the charlatans on Twitter who post graphs like this. They want to sell you Substacks. They will never post graphs like the actual savings.
Don't be too scared then by January retail sales heating up. It's not all overleveraged consumers going wild.
Data about credit scores:
- Distribution of credit scores as of April 2022, posted in January 2023. The WSJ article (see linked article at bottom of post) defines subprime as sub 660, which is roughly around 25-30% of US consumers with credit scores.
- Average credit score is around 710 currently. It was 687 in 2010. Here is a table for all ages, using 2021 data. Minnesota has the highest average at 742, while Mississippi averages 681.
So who is suffering? Auto loan data:
- Graph of share of 30 days or more delinquent subprime (sub 660) auto debt
- Graph of share of 30 days or more delinquent subprime (sub 660) auto debt, broken down by credit score. The trend for those sub 660 is pretty unremarkable, and it is those sub 580 credit score really seeing a big uptick. This is the bottom 15% roughly of US consumers with credit scores (see first graph).
- What about across all credit scores: Well the share auto delinquent more than 90 days is 3.73%; more than 60 days is 1.84% (Ycharts). I couldn't find the most recent 30 day or more auto delinquency rate but from Ally Bank it appears to be around 2-3%. Beware of some fear-mongering when you hear statistics like 'delinquencies rose 30%' because often it's a move from say 2% to 2.6%; the level is already very low so the percentage change is not very meaningful.
- The subprime (< 660 credit score) auto delinquency rate for 30 days or more debt is 9.3%
- Student loan debt and auto debt is a relatively small portion of overall household debt. It's still mostly mortgage debt like it has always been. So this is not going to trigger a 2008 meltdown on its own.
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