Dec. default rates 'low and stable:' Experian

January 20, 2016

WASHINGTON (1/20/16)--U.S. consumer default rates continue to tread in stable waters, as Experian reported this week that its monthly composite default index remained unchanged in December at 0.97%.

Bank card default rates dropped by 42 basis points during the month, edging that default rate down to 2.49%, while the auto-loan default rate stood pat at 1.04%.

Mortgage defaults rose, meanwhile, but only by 2 basis points to 0.84%.

“The consumer economy looks good,” said David M. Blitzer, managing director and chair of the committee of the S&P/Experian Consumer Credit Default Indices. “Consumer credit default rates are low and stable, and consumer sentiment measures are upbeat.”

Three of the five major cities tracked by the index experienced decreasing levels of defaults in December, according to Experian.

Los Angeles defaults dropped 9 basis points to 0.65%, Miami’s fell 4 basis points to 1.44%, and Chicago’s slipped 3 basis points to 1% during the month. New York and Dallas reported increases of 9 basis points and 22 basis points respectively.

“While the economic news on Main Street is good, the New Year opened with turmoil on Wall Street, as stock prices dropped in the opening week and the market crossed the -10% correction mark in the second week,” Blitzer said. “The two factors being cited for weakness on Wall Street are the strong dollar and weak oil prices. For consumers, both of these are good stories: cheap gas and lower prices on imports.”

The falling unemployment rate and low inflation also have given consumers more confidence in recent months, Blitzer said.