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Late Payments on Consumer Loans Highest Since 1992, ABA Says
By Hugh Son
April 3 (Bloomberg) -- Consumers fell behind on car, credit-card and home-equity loans at the highest level in 15 years during the fourth quarter, another sign the U.S. economy is slowing, according to an American Bankers Association survey.
Payments at least 30 days past due increased across all eight categories of loans tracked, the Washington-based group said today in a statement. Late loans climbed 21 basis points to 2.65 percent of all accounts in a consumer-loan index created by the group.
``The rise in consumer credit delinquencies is consistent with a rapidly slowing economy,'' ABA chief economist James Chessen said in the statement. ``Stress in the housing market still dominates the story, but it's a broader tale.''
Lenders including American Express Co., the third-biggest credit-card network, and Capital One Financial Corp. doubled reserves for soured U.S. debt in the fourth quarter. Overdue bank-card accounts reached 4.38 percent in the quarter, according to the ABA, as the slowing economy made it harder for consumers to repay debt.
The overall increase was driven by late payments for car loans, which make up two-thirds of all closed-end consumer installment loans, Chessen said. Auto loan delinquencies rose to 1.9 percent from 1.81 percent. Overdue mobile home payments rose to 2.92 percent from 2.87 percent.
Federal Reserve Chairman Ben S. Bernanke acknowledged for the first time yesterday that a U.S. recession is possible because consumer spending, employment and homebuilding will deteriorate this year.
The U.S. economy grew at an annual pace of 0.6 percent from October to December. Growth probably slowed to a 0.2 percent annual rate in the first quarter, according to the median estimate of analysts surveyed by Bloomberg News.
`Anemic' Income Growth
Rising late payments will continue in the first half of this year, as ``food and gas prices remain stubbornly high and income growth is anemic,'' Chessen said.
MasterCard Inc. Chief Executive Officer Robert Selander said in a March 11 interview that U.S. consumers are spending more on gasoline and food, crimping spending for luxury items. MasterCard is the second-biggest payment-card network after Visa Inc.
``What we see is a mix change in how consumers are spending,'' Selander said in the Bloomberg Radio interview. ``With the price of gasoline up approximately 30 percent from where it was a year ago, with commodities prices up and working their way into prices at the supermarkets, consumers are spending more of their money now on gas and groceries.''
To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net
Last Updated: April 3, 2008 08:32 EDT |
