How Consumers Look Today as Recession Risks Become More Prominent

The Census data from 2018 might be challenged by other reports that have come in since. The monthly Bureau of Economic Analysis (BEA) data showed that personal income increased by 4.5% in all of 2018, versus an increase of 4.4% in 2017. That said, the measurement of personal income also includes gains in personal dividend income, employee compensation and even farm proprietors’ income.

While 2018 numbers are looking backward, the Census also reported that the percentage of people with health insurance coverage for all or part of 2018 was 91.5%, versus the 92.1% rate in 2017. Between 2017 and 2018, the percentage of people with public coverage decreased 0.4 percentage points and the percentage of those with private coverage did not statistically change.

The most recent data on personal income and spending was released on August 30, and it measured July of 2019. That report indicated that total employee compensation was already up over 3.7% in July from the end of 2018, and the wages and salaries were also up 3.9% from the end of 2018. The BEA also showed that the personal saving rate, which is personal saving as a percentage of disposable personal income, was 7.7% in July.

On September 10, CoreLogic’s monthly Loan Performance Insights Report showed that 4% of mortgages on a national basis were in some stage of delinquency (30 days and higher, including those in foreclosure) in June 2019. While this may be higher than the trough, it is a 0.3 percentage-point drop from the 4.3% rate in June 2018, but the rate of early-stage delinquencies (30 to 59 days past due) at 2.1% was up from the 2.0% rate in June 2018. Measuring early-stage delinquency rates is important for analyzing the health of the mortgage market. Still, June’s serious delinquency rate of 1.3% was said to be the lowest for the month of June since 2005.

One issue that has to be tracked is auto loan delinquencies. A September 11, 2019, report from Credit Union Insight suggests that auto loan delinquencies are the highest level in the past decade. Along with the “peak auto” trends of 2017 to 2018, the report showed that 2018 was a year loaded with high levels of newly originated auto loans and leases (some $584 billion), and by the end of 2018 there were over 7 million Americans who were at 90 days or more in loan delinquencies. In car loans, Experian noted on September 5 that a record percentage of prime borrowers are choosing used vehicles as loan terms have reached a new high and new vehicle loan amounts remain above $32,000.

Overall, consumer credit scores are running at all-time highs. A FICO report from September showed that the all-time high of 706 is 20 points higher than the peak in the last decade. FICO data also showed that credit card account delinquencies of 90 or more days was down by 62% and overall credit card utilization is down by 28%.

Student loan debt has continued to rise in America. This competes directly with an ability to save, as well as competing with an ability to spend. The Federal Reserve data showed that student loan debt was $1.606 trillion as of June 2019. That’s up from $1.568 trillion at the end of 2018 and from $1.49 trillion at the end of 2017. In 2014, it was just $1.236 trillion.

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