Consumer credit quality is stabilizing

A number of the nation’s largest banks, including Wells Fargo and Bank of America, have reported their fourth quarter and full year earnings results. Many of them are reporting that consumer credit quality is stabilizing. In other words, folks previously not paying their bills are now paying their bills again.

Analysis: Because the ultimate economic statistic is consumer spending, anything that indicates that the consumer budget situation is stabilizing is important. I don’t want to read too much into the earnings reports of these banks, but it seems as if the U.S. consumer is becoming economically stable. This likely means a bump up in consumer confidence, and consequently consumer spending. Dollars exiting peoples pockets usually leads to hiring.

Importance grade: 8; because the results by these banks is indirect evidence of an improving consumer credit situation this number cannot qualify as a 10. However, because Wells Fargo, Bank of America, Citigroup and the other major banks that have reported are huge issuers of credit cards for them to see improvement in the consumer credit situation is worth paying attention to.

Jason