Yet more signs of consumer stress. From Bloomberg:
Consumers fell behind on loans secured by their homes at the fastest pace in two decades in the first quarter, signaling deeper distress in the U.S. economy, the American Bankers Association reported.
Home-equity lines of credit at least 30 days past due rose 14 basis points to 1.1 percent of accounts for the quarter, the Washington-based group said today in a statement. Delinquent credit-card accounts increased 13 basis points to 4.51 percent, the highest level since 2006.
“People are looking for any source of funds to pay their daily expenses,” Carol Kaplan, spokeswoman for the bankers’ group, said yesterday in an interview. “It’s a sign of the overall condition of the economy that people are having trouble making their payments….
The rise in delinquent home-equity accounts was the biggest since the ABA began collecting data in 1987, Kaplan said. It was also the highest in 11 years. Delinquencies often don’t peak until late in an economic slowdown.
ABA chief economist James Chessen said in the statement that because of job losses, slow income growth and falling real estate and equity markets, there is “little relief” in the coming months.
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This story adds to the food for thought that a recession is not only in place but gaining fast momentum:
The number of private sector jobs fell by 79,000 in June, according to a payroll report released Wednesday, with the decline exceeding economists’ forecasts.
The National Employment Report from Automatic Data Processing showed a 76,000-job drop for goods-producing businesses, the 19th monthly decline in a row, coupled with a 3,000 job decline in the services sector.
A majority of the production job losses came from the manufacturing sector, which lost 44,000.
Economists polled by Briefing.com had expected jobs to decline by 20,000 in June.
>> AS usual there is no economic model that has a hint as to the reality in place!!
To steal Bill Gross’s analogy, the lower-middle/middle class are the plankton of the financial ecosystem.
If they die off, higher-order consumers (the top 10%) will hurt too.
Bad news for AAPL.
YMMV.