The report also measures the default rates for credit cards and auto loans. The composite default rate of all three loan types in February was 0.97%, up slightly from 0.96% in January.
The bank card default rate was 2.56%, an increase of four basis points compared with January. The auto loan default rate was 1.05%, up from 1.04% in January.
“Low and stable consumer credit default rates confirm the positive picture of the consumer economy seen in recent data on personal income and consumption,” says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a statement. “Other positive indicators of the consumer economy include continued strong auto sales and rising home prices. Measures of consumer confidence and sentiment remain at high levels after slipping a bit in January and February. Consumer credit usage continues to expand, though January’s most recent data showed a somewhat slower pace than in the 2015 fourth quarter.”
Blitzer says recent gains in the labor market, including a large jump in job growth in February, an unemployment rate at 4.9% and the low level of weekly initial unemployment claims, “all contribute to good consumer credit conditions.”
“Low and falling gasoline prices imply extra spending money for many consumers, helping both spending and credit issues,” he says. “However, there could be some risk here – crude oil prices fell to a recent low last month before rebounding. Between Feb. 11 and March 11, oil prices moved from $26.21 to $38.50 a barrel – a rise of 47%. If this is sustained, it could dampen consumer spending somewhat.
“While inflation is largely absent from current economic reports, the same strong job growth boosting consumer spending may be setting the stage for future price increases or further action from the Fed to raise the interest rate,” he adds. “For now, low default rates and a strong consumer economy are in place.”