Consumers’ Outlook on Credit Access Continues to Improve

1/11/2017 4:30:00 PM

The Federal Reserve Bank of New York’s Survey of Consumer Expectations also shows an improvement in consumers’ expectations for making debt minimum payments on time.


Consumers’ outlook on credit availability continued to improve through the end of 2016, according to the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations.

“Perceptions of credit access relative to a year ago and expectations regarding year-ahead credit availability both improved slightly from the previous month,” according to a new release from the Fed. “The proportion of households expecting it to be easier to obtain credit a year from now rose to 23.4 percent, returning to levels last seen in December 2014.”

When asked if obtaining credit will be “much easier, somewhat easier, equally easy/hard, somewhat harder” or “much harder” a year from now, 2.79 percent said it will be much easier, compared to 1.59 percent who provided that response in November, according to the survey.

Consumers’ perceptions on credit availability now compared to a year ago did not change significantly from November to December 2016, although the percent of survey respondents who said it is easier declined.

When asked if obtaining credit is “much easier, somewhat easier, equally easy/hard, somewhat harder” or “much harder” than a year ago, 2.67 percent said it was much easier in November, compared to 2.37 percent in December. According to the survey, 17.31 percent of respondents said obtaining credit was somewhat easier in November compared to 19.39 percent who provided that response in December.

The Fed also reports that consumers’ average perceived probability of missing a minimum debt payment over the next three months declined slightly but the December result still remains higher than the average in 2016—13.3 percent.

The December average of missing a minimum debt payment was 14.3 percent compared to 14.9 percent in November.

A year ago, in December 2015, that level was 12.33 percent and it declined to 11.78 percent in January 2016. It started to increase overall in April 2016 when the average was 12.39 percent, according to the Fed.

Household Spending and Income Expectations

The Fed also reports an increase in consumers’ spending and income growth expectations for the year ahead.

The median income growth expectations increased from 2.4 percent in November to 2.8 percent in December, flipping the declining trend that has occurred since August 2016, according to the news release.

At the same time, “median household spending growth expectations rose slightly from 3.6 percent in November to 3.7 percent [in December], continuing the rebound observed last month. Annual averages of this measure over the past calendar years have been 4.7 percent in 2014, 3.7 percent in 2015, and 3.5 percent in 2016.”

The Survey of Consumer Expectations is based on consumers’ expectations for overall inflation and how they expect prices for food, gas, housing and education to behave. It also shows consumers’ views on job prospects, earnings growth, and their expectations about future spending and access to credit.

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