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
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.
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