Wednesday, September 28, 2005

Credit delinquencies hit the highest level in Q2

ABA (American Banking Association) just released its Q2 delinquecies data and showed a jump in every category. This is Q2 numbers, before Katrina and before gasoline hits $3 which curiousy was the main reason quoted by ABA as the reason for increased delinquency. I believe oil is only one reason among the many factors that is causing delinquency to go higher.

The main point I was going to make is that as people were looking at Q1 and Q4 of last year data, CEOs were confident that credit quality remains benign. As a result there was a big push to continue using credit as a boost to top line growth as I have detailed in my post, " Snapshots of receivable growth".

Now as delinquencies climb, will we see a drop in top line growth as manufacturers shun away from credit financing or will we need to dig deeper in SEC filings to see more underhanded selling of receivables such as DELL has been doing?

I vote the latter.

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