Monday, June 17, 2013

Households' financial health continues to improve

U.S. households continue to bolster their financial health. Financial burdens are down to 30-year lows, and credit card delinquency rates are at all-time lows. These are some impressive and dynamic adjustments that have been achieved in just 4-5 years, and they set the stage for a return to stronger economic growth in the future.

Households' financial burdens (monthly payments as a percent of disposable income) as of March 2013, are at their lowest levels in over 30 years, according to calculations by the Federal Reserve.



Credit card delinquency rates (shown on a quarterly basis for all banks in the first of the above charts, and on a monthly basis for American Express (revolving), Bank of America, Capital One, Chase, Citibank, and Discover, in the second chart. Delinquency rates based on all available data are as low as they have ever been, and are likely to continue to decline. Good news all around, especially for bank profits. I note that an index of financial sector stocks (XLF) has more than tripled since March, 2009. 

10 comments:

steve said...

not to be a downer but student loans throw a damper on this post. no?

Hans said...

Without a doubt, Steve...

Much of the reduction in homehold debt is due to bankruptcy and or forecloses..

Household and the bank sector will have another crisis down the road, as the changes for avoidance was never implemented...

We will have the FIFTH year of a billion dollar federal shortfall...

BTW, the most recent foreclose rate show it was up by 10%...

The Phony Fed Recovery continues...

Bill Platteter said...

The regional make-up of this data is important. Down here in Houston we never experienced a great fall in real estate value. Sure some lost jobs and homes but nothing like Fla or Ca or Az. However since the news is so centered on both coasts we heard nothing but the constant drum beat of disaster. Some reports mentioned one in 5 mortgages in foreclosure. Of course that means 80% is okay. The news scared us all and I like many Americans stopped spending as much. We cut back and actually began to pay off a lot of our debt. I can only speak for myself and my family but what Scott is showing is an accurate depiction of what we have done.

William McKibbin said...
This comment has been removed by the author.
Gloeschi said...

"Soaring real yields are good news" - CBP June 11, 2013


"Fears of tapering are misplaced" - CBP June 13"

The hits just keep coming.

William McKibbin said...

Federal stimulus is headed down, stocks are down, bond interest is up, gold is down, growth is tepid, inflation is tame -- all that argue for going to cash and awaiting higher interest rates -- transitioning cash into Treasuries between 9-12% rates would be interesting -- however, who knows what is really going to happen -- bottomline, stick with acquring world-class skills that earn premium wages that convert into dividend and rent-earning equities over a lifetime -- the markets are crazy and "playing" the bond market will be treacherous as interest rates ramp up -- the 21st century is going to be tough unaccredited investors (those who earn less than $300K annually with networths of less than $1 million) -- most Americans should be terrified about their economic future -- the good life is about to get much better while the standard of living for everyone else endures a long period of agonizing erosion that will last a century -- that's the facts, folks...

William McKibbin said...
This comment has been removed by the author.
William McKibbin said...

PS: The only Americans who have any reason for hope are accredited investors (those who earn more than $300K annually with net worths greater than $1 million) -- everyone else should be under cover awaiting the four horsemen of the apocalypse -- more at:

http://wjmc.blogspot.com/2010/05/post-modern-apocalypse.html

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