The U.S. Economy and Consumer Wealth in 2022

This month’s Market Pulse webinar presenters included Dylan Hall, Co-Founder and CEO at Safe Rate; Peter Hellwig, Co-Founder at Atmos Financial; Amy Crews Cutts, President and Chief Economist at AC Cutts & Associates; Sarah Briscoe, Lead Commercial Statistical Analyst at Equifax; and Tom Aliff, Risk Consulting Leader at Equifax. The webinar was moderated by our very own Michael Chester, Director of Business Development here at Equifax.

Here you will find insights and trends on the latest consumer credit and commercial data as well as a U.S. economic update. If you would like to read about our guest speakers and entrepreneurs, Dylan Hall and Peter Hellwig, read our, “You Asked, Entrepreneurs Answered” blog. 

Watch a replay of our webinar, “Market Pulse: How Entrepreneurs Leverage Data for Smarter Actions” or download a copy of the presentation.

 

Conflict in Ukraine Leaves Uncertainty in the U.S. 

On February 24, we were coming out of the pandemic with omicron numbers and good news on economic numbers except inflation. Then on February 26, everything changed. Gasoline, which affects most consumers, is up 25%. This is a big change for consumers' buying power. In Figure 1 on the left, you can see the S&P 500. Consumers spend less when the stock market falls. Even if a family doesn't have a stock portfolio, they still worry and do not spend on big ticket items.

Cutts went over the interest rates, as seen on the right side of Figure 1. The Treasury bounced up 2% as of March 10. Interest rates have been pretty benign even with the news going on right now. This is driven by chip shortages, logistics problems, and a lot of things from the supply chain breakage. 

Figure 1

Supply Chain Crisis

Chips, ships, trucks, bucks have all been affected by the recent supply chain shortage and crisis the world has been facing. Both the food and energy numbers have been rising rapidly with this being the highest level since the 1980s. Figure 2 shows the producer price index for intermediate goods or the inputs to what we buy. Commodities and raw materials are up quite a bit (see Figure 2). 

On the right is what it costs to ship. This has gone up tremendously. The air freight has gone up but sea shipping has stayed rather level. Cutts goes on to say that a bottle of wine is up a dollar for shipping because of the supply chain and shipping problems. 

Figure 2
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​​​​​According to Cutts, we produced the most microchips ever this year. On the right hand side of Figure 3, you can see the impact month-by-month of the chip shortages from last year and the impact it had on automakers. Demand is definitely rising fast. For more on the supply chain crisis, sign up for our upcoming April Market Pulse webinar. 

Figure 3

Latest Consumer Credit Trends

Next, Tom Aliff went over the latest consumer credit trends. Aliff started with mortgage and auto originations. Mortgage had a record setting year in 2020. Even though we are still rounding out the 2021 year it is already still 9% higher than we were in 2020. With respect to auto we saw dramatic growth with a 10% increase in new accounts and a 21.4 point increase in auto year-to-date originations with a subprime share dropping from the 2018-2020 levels. 

Figure 4

With the new account originations, Aliff went over where the growth is coming from, which is shown in Figure 5. These are consumers who are moving from underbanks and are not having credit available. The data shows however that we are not seeing as much incremental growth as we thought we would see. That being said, the originations earlier in the presentation were most likely driven by people who already have access to credit, which we have mentioned in our previous Market Pulse webinars. 

Figure 5

Small Business Lending Update

To conclude our recent updates, we had Sarah Briscoe, Lead Commercial Statistical Analyst at Equifax, provide a small business lending update. Briscoe started by reporting the Small Business Lending Index (SBLI). According to Briscoe, the SBLI decreased 1% to 138 in January 2022 from December 2021. Compared to January 2021 the index is flat however on a 3 month rolling basis it is up 2% from last year. When it comes to the states in the U.S., a majority of states saw a 12-month rolling lending increase over 2021. Northern states, however, saw decreases, even though they were relatively small.

Figure 6

Next, Briscoe went over the Small Business Delinquency Index (SBDI), by stating the SBDI for the measure of 31-90 days passed due grew 1 basis point from 1.245% in December 1.25% in January. This is the first month-over-month increase since September 2021. Compared to a year ago, delinquency decreased 40 basis points. This is the 11th consecutive year-over-year we have seen decreases in delinquency. 

Figure 7

All industries saw improvement in financial stress over the last year. Retail is seeing the greatest improvement, followed by transportation, as shown in Figure 8. 

Figure 8

The last small business data Briscoe went over was the Small Business Default Index (SBDFI). The SBDFI, compared to January 2021, decreased 135 basis points. This is the 8th consecutive month of year-over-year decreases. All industries are seeing improvements over last year. The states with highest default rates are still lower than the default rates before the pandemic. When looking at month-over-month, all industries saw a decrease in default rates, with Accommodations seeing the largest decrease. 

Figure 9

Looking to the Future

The Forecasted Small Business Default rates are expected to increase in 2022 over the last year to 20219 levels. All the data can be shown below (Figure 10): 

Figure 10

The More you Know

If you would like to hear more insights on small business data and consumer trends, please view our webinar recording and deck below.

Watch a replay of our webinar, “Market Pulse: How Entrepreneurs Leverage Data for Smarter Actions” or download a copy of the presentation.

Read our Q&A blog here. 

Access additional related insights here. If you would like to speak to an Equifax representative about any of the data or solutions mentioned in this blog, please contact us today.   

 

* The opinions, estimates and forecasts presented herein are for general information use only. This material is based upon information that we consider to be reliable, but we do not represent that it is accurate or complete. No person should consider distribution of this material as making any representation or warranty with respect to such material and should not rely upon it as such. Equifax does not assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice