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Consumer debt defaults accelerating shortly after overall credit card debt crosses $1 trillion

Consumer debt defaults accelerating shortly after overall credit card debt crosses $1 trillion

If the 2008 financial crisis was known for its millions of foreclosures, the next collapse will likely be remembered for the amount of defaulted debt that occurs for consumers, corporations, and perhaps even major sovereign governments.

And part of these debt defaults are already beginning shortly after consumer credit card debt has escalated to over $1 trillion.

Two weeks ago, when JPMorgan launched Q1 earnings season, we noted that while the results were generally good, one red flag emerged: the company’s credit card charge offs rose to just shy of $1 billion, the highest in four years.

What we found was not pretty. According to the latest data from the S&P/Experian Bankcard Default Index, as of March 2017, the default rate on US credit cards had jumped to 3.31%, an increase of 13% from a year ago, and the highest default rate since June 2013.

The bank card default rate recorded a 3.31% default rate, up nine basis points from February. Auto loan defaults came in at 1.00%, down five basis points from the previous month. The first mortgage default rate came in at 0.75%, up one basis point from February and reaching a one-year high.

The National bank card default rate of 3.31% in March sets a 45-month high. When comparing the bank card default rate among the four census divisions, the bank card default rate in the South is considerably higher than the other three census divisions. Upon further analysis to the South’s three census regions, East South Central – comprised of Kentucky, Tennessee, Alabama, and Mississippi – has the highest bank card default rate.  – Zerohedge

Yet credit card debt is not the only consumer debt that is well over $1 trillion here in 2017.  Student loan debt, held primarily by millennials and potentially co-signed for by their parents, is estimated to be around $1.3 trillion with debt tied to automobile loans at last check estimated as well to be over $1.2 trillion.

And when you add in all the inflated costs attributed to necessary expenditures such as rents, medical (Obamacare), food and energy, the bottom line is that the decline in consumer spending which was seen in this quarter’s GDP numbers will only get worse, and more than likely we are just now beginning to see Americans defaulting on their debts at an ever escalating rate.

Kenneth Schortgen Jr is a writer for The Daily Economist, Secretsofthefed.comRoguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.


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