With the nature of this recession and its wide-reaching impact, I’ll be looking out for several things in 2011:
1. Changes in financial behaviors: When will we see a return to traditional behaviors?
2. Consumers’ adaptability: How will consumers adapt to the new credit environment?
3. Consumers’ state of mind: Where is the lingering financial malaise?
4. Credit originations: Specifically subprime credit originations. I’ll be looking at:
- Pace of credit-origination growth
- Consumer behaviors when credit demand exceeds supply, such as using credit substitutes
5. New credit use: Does the average new card balance deviate considerably from prerecession levels?
6. Cautious consumer spending: Lenders have discouraged consumers from using credit through anemic originations, pervasive line reductions on cards, and closing inactive cards. Will these behaviors keep consumer spending down in 2011?
7. Return of consumer spending: As I talked about last year, there have been some early signs of credit growth (auto loans, deleveraging debt). Will these consumer and lender behaviors continue to progress us toward credit growth?
8. Consumer confidence: Overall consumer confidence is low, but I will be watching to see which consumers are confident in their finances and comfortable again with credit cards.
9. Credit card usage: How are consumers using their cards? How does this compare to overall spending? Can I see new patterns in consumer spending and payment habits?
10. Lines of credit: In 2010, lines of credit were lower and capped for risk control and new regulatory requirements. Will we start to see lines of credit increase in 2011?
That’s what I’ll be keeping an eye on in the credit market in 2011. Come back every month to the Equifax Personal Finance Blog to see my most recent findings.
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