We’ve discussed in prior articles how consumers aren’t leveraged. However, when someone loses their job even if they only owe a small amount on their credit cards, it becomes a big problem. Luckily, last year the government came to the rescue with very strong unemployment benefits that paid some people more than their normal job did.
$BAC Bank of America credit card days past due trends pic.twitter.com/ednjtXLuaM
The slide above from Bank of America shows the latest developments. Credit card delinquencies fell from March through July as we had a recovery along with $600 weekly unemployment checks from the federal government. From August to early Q4 delinquencies increased maybe because the unemployment checks expired. Since then, they have fallen (outside of 90+ day delinquencies). That’s surprising because the economy got much worse in December as there were job losses for the first time in the recovery.