u.s. consumer credit outlook · 2020-06-08 · u.s. consumer credit outlook scott hoyt, senior...
TRANSCRIPT
U.S. Consumer Credit Outlook
Scott Hoyt, Senior DirectorDavid Fieldhouse, Director May 2020
XXXXX, Title
Moody's Analytics operates independently of the credit ratings activities of Moody's Investors Service. We do not comment on credit ratings or potential rating changes, and no opinion or analysis you hear during this presentation can be assumed to reflect those of the ratings agency.
U.S. Consumer Credit Outlook, May 2020 3
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
4-Jan-2020 1-Feb-2020 29-Feb-2020 28-Mar-2020 25-Apr-2020 23-May-2020
Unprecedented Rate of Job LossInitial claims for unemployment insurance, ths
Sources: ETA, Moody’s Analytics
U.S. Consumer Credit Outlook, May 2020 4
-14-12-10-8-6-4-2024
0
2
4
6
8
10
12
14
16
07 08 09 10 11 12 13 14 15 16 17 18 19 20
Unemployment rate, % (L)Employment, % ch yr ago (R)
Unemployment Soars; Jobs Evaporate
Sources: BLS, Moody’s Analytics
U.S. Consumer Credit Outlook, May 2020 5
01020304050607080
Low Medium High
2019 employmentMarch declineApril decline
Job Losses Mainly Low Pay, Esp. at StartShare of jobs by wage tier, %
Sources: BLS, Moody’s Analytics
U.S. Consumer Credit Outlook, May 2020 6
0
1
2
3
4
5
6
7
15 16 17 18 19 20
Real Nominal
Decline in Income Growth Accelerates
Sources: BEA, Moody’s Analytics
Disposable income, % change yr ago
U.S. Consumer Credit Outlook, May 2020 7
22,000
24,000
26,000
28,000
30,000
32,000
34,000
36,000
4-Jan-2020 15-Feb-2020 28-Mar-2020 9-May-2020
Stock Market DownWilshire 5000 Index, daily close, avg, 31Dec80 = 1404.596 bil
Sources: SIX Financial Information, Moody’s Analytics
U.S. Consumer Credit Outlook, May 2020 8
1.752.002.252.502.753.003.253.503.754.00
-1.25-1.00-0.75-0.50-0.250.000.250.500.75
14 15 16 17 18 19 20
Change year ago (L)Price (R)
Gasoline Prices PlungeUnleaded gasoline, $ per gallon
Sources: EIA, Moody’s Analytics
U.S. Consumer Credit Outlook, May 2020 9
Drivers Stay Home as COVID-19 Worsens
Sources: Department of Transportation, Moody’s Analytics
220
230
240
250
260
270
280
00 02 04 06 08 10 12 14 16 18 20
Vehicle miles traveled, bil, SA
U.S. Consumer Credit Outlook, May 2020 10
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
18 19 20
At Least a Mini Refi BoomMBA refi applications, index Mar 16 1990=100
Sources: Mortgage Bankers Association, Moody’s AnalyticsCopyright© Mortgage Bankers Association, Feb 2013. All Rights Reserved.
U.S. Consumer Credit Outlook, May 2020 11
180
200
220
240
260
280
300
320
18 19 20
Home Sales Fell BrieflyMBA purchase applications, index Mar 16 1990=100
Sources: Mortgage Bankers Association, Moody’s AnalyticsCopyright© Mortgage Bankers Association, Feb 2013. All Rights Reserved.
U.S. Consumer Credit Outlook, May 2020 12
02468
101214161820
17 18 19 20
Vehicle Sales TumbleVehicle sales, mil, SAAR
Sources: Autodata, Moody’s Analytics
U.S. Consumer Credit Outlook, May 2020 13
-8-6-4-202468
10
11 12 13 14 15 16 17 18 19 20
Total Ex auto Core
Retail Sales Tumble by Any Measure
Sources: Census Bureau, Moody’s Analytics
Retail sales, 3-mo MA, % change yr ago
U.S. Consumer Credit Outlook, May 2020 14
-90 -80 -70 -60 -50 -40 -30 -20 -10 0 10 20Apparel
FurnitureAppl & elecRestaurant
Sports & hobbyDept store
GasolineMisc
VehicleTotal
HealthcareOth gen mer
Building suppGrocery
Nonstore
Sales Plunge in Most Segments
Sources: BEA, Moody’s Analytics
Retail sales, % change February to April
U.S. Consumer Credit Outlook, May 2020 15
Retail Prices Tumble
Sources: BEA, Moody’s Analytics
Retail sales deflator, ex gasoline, % change
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
16 17 18 19 20
U.S. Consumer Credit Outlook, May 2020 16
-12 -10 -8 -6 -4 -2 0 2 4 6Appl & elec
NonstoreOth gen mer
Dept storeGasoline
HealthcareSports & hobby
GroceryTotal
VehicleBuilding supp
ApparelMisc
RestaurantFurniture
20Q1Full history
Retail Pricing Pressures Pervasive
Sources: BEA, Moody’s Analytics
Retail deflator, % change yr ago, average
Sorted by difference between bars
U.S. Consumer Credit Outlook, May 2020 17
-25
-20
-15
-10
-5
0
5
10
17 18 19 20
Johnson Redbook TRE
Signs of a Turn?
Sources: The Retail Economist, Johnson Redbook, Moody’s Analytics
Chain store same-store sales, % change yr ago
U.S. Consumer Credit Outlook, May 2020 18
Utilized Card Balance Drops in April
-200
-150
-100
-50
0
50
100
150
200
07 08 09 10 11 12 13 14 15 16 17 18 19 20
USA North Dakota
$, average, YoY difference
Sources: CreditForecast.com, Moody’s Analytics
-12.1-49.8
U.S. Consumer Credit Outlook, May 2020 19
Delinquency Tracks Unemployment Claims60 day dlq rate (%, annu), unemployment claims/labor force (mil)
0
5
10
15
20
25
0
4
8
12
16
20
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
60-day delinquency (L) Normalized claims (R)
Sources: CreditForecast.com, BLS, Moody’s Analytics
U.S. Consumer Credit Outlook, May 2020 20
Credit Scores Higher Than Financial CrisisCurrent credit scores, Sept 08 and Jan 20, balance weighted
600
625
650
675
700
725
7502008 2020
Auto
First Mortgage
HELOC
HE Loan
Bank Card
Retail Card
Consumer Installment
Consumer Revolving
Other
Sources: CreditForecast.com, Moody’s Analytics
U.S. Consumer Credit Outlook, May 2020 21
Household Finances Were SolidDebt service burden ratio, mortgage and consumer, percent
3
4
5
6
7
8
1980 1986 1992 1998 2004 2010 2016
Mortgage Consumer
Sources: Federal Reserve Board, Moody’s Analytics
U.S. Consumer Credit Outlook, May 2020 22
Unsecured Lending and Auto at Risk60 days delinquent, % of outstanding balance, 12-mo MA
0.3
0.6
0.9
1.2
1.5
1.8
07 08 09 10 11 12 13 14 15 16 17 18 19 20
Retail card Bank cardConsumer finance First mortgageAuto
Sources: CreditForecast.com, Moody’s Analytics
U.S. Consumer Credit Outlook, May 2020 23
Lending Standards Meaningfully TightenedNet % tightening
-30-20-10
01020304050
12 13 14 15 16 17 18 19 20
Credit card Auto Other non-mortgage
Sources: Federal Reserve, Moody’s Analytics
U.S. Consumer Credit Outlook, May 2020 24
Credit Scores Increase in AprilAverage of consumers, NSA
660
670
680
690
700
710
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
VantageScore 3.0 ERS 3.0 Score
Sources: CreditForecast.com, Moody’s Analytics
U.S. Consumer Credit Outlook, May 2020 25
ACCOUNTS ACCOMMODATED
STUDENT LOANS 128.2 98.6
FIRST MORTGAGE 49.4 4.1
AUTO 84.6 5.5
HOME EQUITY 13.1 0.8
CREDIT CARD 620.5 15.5
CONSUMER FINANCE 83.9 1.3
Payment Assistance WidespreadMay 12 possible accommodations (#, mil), April account (#,mil)
Sources: Equifax Credit Trends, CreditForecast.com, Moody’s Analytics
U.S. Consumer Credit Outlook, May 2020 26
Debt Levels Expected to DeclineBalances of open accounts, y/y 12 mth ma, % of $, April Baseline
Sources: CreditForecast.com, Moody’s Analytics
-6-4-202468
1012
16 17 18 19 20 21
Residential Credit CardConsumer finance AutoStudent
U.S. Consumer Credit Outlook, May 2020 27
Highly Exposed States Vulnerable
0.5
1.0
1.5
2.0
2.5
2020 2021
NY NV KS
Sources: Equifax Credit Trends, CreditForecast.com, Moody’s Analytics
Gross loss rate, bank card, index, March 2020=1, April Baseline
West Chester, EBA-HQ+1.610.235.5299121 North Walnut Street, Suite 500West Chester PA 19380USA
New York, Corporate-HQ+1.212.553.16537 World Trade Center, 14th Floor250 Greenwich StreetNew York, NY 10007USA
London+44.20.7772.5454One Canada Square Canary Wharf London E14 5FAUnited Kingdom
Toronto416.681.2133200 Wellington Street West, 15th FloorToronto ON M5V 3C7Canada
Prague+420.22.422.2929Washingtonova 17110 00 Prague 1Czech Republic
Sydney+61.2.9270.8111Level 101 O'Connell StreetSydney, NSW, 2000Australia
Singapore+65.6511.44006 Shenton Way#14-08 OUE Downtown 2Singapore 068809
Shanghai+86.21.6101.0172Unit 2306, Citigroup Tower33 Huayuanshiqiao RoadPudong New Area, 200120China
Contact Us: Economics & Business Analytics Offices
[email protected] moodysanalytics.com
U.S. Consumer Credit Outlook, May 2020 30
© 2020 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt
securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.