This Is Where The Next US Debt Crisis Is Hiding
by Tyler Durden
ZeroHedge.com
Tue, 02/20/2018
As the Federal Reserve reported most recently two weeks ago, US consumer non-mortgage debt has never been higher: as of December 31, 2017, US households had a record $1.0 trillion of credit card/revolving loans, a record $1.3 trillion of auto loans, and a record $1.5 trillion of student loans.
Among these, credit card and auto loans, in particular, have been experiencing accelerating delinquencies. As a result, finance companies/banks have been increasing bad debt provisioning to build balance sheet reserves due to expectations of rising defaults. The chart below illustrates the highest reported net charge off rates (NCOs) in years.
And while all major credit card companies and banks are experiencing increasing credit costs from the trough of late 2015, one would be remiss to spot this at the aggregate level.
As the chart below courtesy of TCW, which illustrates modestly rising net charge offs (i.e. defaults) for the entire U.S. banking universe, NCOs increased from a trough in 4Q15 at 2.9%, which coincidentally was the same quarter the Fed executed its maiden interest rate hike of this cycle, albeit very modestly.
The Rest…HERE
