Debating Consumer Credit Data

This is an interesting mix of analyses, with several economists drawing opposite conclusions from the data:

“Fewer American households appear to be falling behind on their debt payments, according to a new study, but some economists question whether the data reflect a meaningful easing of consumer-credit problems . . .

The analysis of “early-stage” delinquencies can be key to spotting changing trends. When such data show a slowing, it could indicate that total delinquencies will come down in the next six to 12 months. But the data don’t mean the broader credit problems plaguing banks and other lenders will be eliminated anytime soon.

In fact, the total number of seriously delinquent borrowers and those in default will keep rising for some time, as borrowers who are 30, 60 and 90 days delinquent move to the next phase of delinquency. Overall, household liabilities in delinquency and default rose to $1.15 trillion in June, 10% of total liabilities, according to Mr. Zandi’s analysis of the Equifax data. The delinquency and default rate in June was up from 8.96% in March and 8.01% in December.”

Delinquencies are still going up? This isn’t even a case of less bad = good.

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Source:
Consumer-Debt Picture Shows One Sign of Improvement
RUTH SIMON and CONSTANCE MITCHELL FORD
WSJ, JULY 25, 2009
http://online.wsj.com/article/SB124848104178780505.html

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