Consumers with low credit scores are falling behind on payments for car loans, personal loans and credit cards, a sign that the healthiest consumer lending environment on record in the U.S. is coming to an end. The share of subprime credit cards and personal loans that are at least 60 days late is rising faster than normal, according to credit-reporting firm Equifax Inc. In March, those delinquencies rose month over month for the eighth time in a row, nearing their prepandemic levels.
This may be the sign we are looking for that debt-utilization is peaking and further spending contractions are on the horizon, ready to begin spreading in a predictable fashion through the economy. All of these things are a cause and effect, and they will appear remarkable similar, and occur in similar fashion from one economic cycle to the next.
