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TEXT-Fitch: U.S. consumer confidence could hold back spending, credit
May 30, 2012 / 6:53 PM / 5 years ago

TEXT-Fitch: U.S. consumer confidence could hold back spending, credit

May 30 - Fitch believes the recent decline in consumer confidence could
crimp future spending and that revolving credit growth should remain in check
despite loosening lending standards. The resulting impact on credit card ABS
performance, which is expected to remain strong, will be muted due to extremely
strong fundamentals in the sector. On Tuesday, The Conference Board reported
that its Consumer Confidence Index is at 64.9, down from 68.7 in April.	
	
Whether any potential slowdown in spending as a result of the confidence erosion
translates into lower credit card usage remains to be seen, as lenders have
begun loosening underwriting standards. The Federal Reserve reported that
revolving credit, which includes credit card debt, increased in March by $5.2
billion to $803.6 billion. The increase was attributable to higher gasoline
prices and improved retail sales during that period.	
	
We see several trends that will contribute to continued positive performance for
credit card ABS. In April, every major collateral metric tracked improved.
Retail credit card defaults declined to their lowest level in four years, while
delinquencies were at their lowest in six years. And Retail credit card ABS
followed suit. The reduction in delinquencies bodes well for near-term
performance. Delinquent accounts more than 30 days past due declined by 0.5%.	
	
Over the short term, stagnant wages and slow improvement in the job markets are
expected to present the biggest risks to credit card ABS. The Bureau of Labor
and Statistics reported that both the number of unemployed persons (12.5
million) and the unemployment rate (8.1 %) were flat in April. May figures are
due out on Friday, and we will monitor their impact on the ABS market.	
	
Additional information is available on www.fitchratings.com.	
	
The above article originally appeared as a post on the Fitch Wire credit market
commentary page. The original article, which may include hyperlinks to companies
and current ratings, can be accessed at www.fitchratings.com. All opinions
expressed are those of Fitch Ratings.

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