NEW YORK--(BUSINESS WIRE)--Link to Fitch Ratings' Report: 2014 Consumer Bankruptcy Update (Aggregate Filings Likely to Fall Below One Million)
The U.S. economy's measured improvement coupled with more prudent consumers will result in personal bankruptcies falling to levels not seen since 2007, according to Fitch Ratings in a new report.
Personal bankruptcy filings are currently 12% lower year-over-year through mid-August. Fitch projects total filings for 2014 to fall below one million for the first time in seven years, the fourth straight year of annual declines. One notable factor was the continued improvement in the labor markets. Unemployment stood at 6.2% in July, 15% lower year-over-year and 38% below the recession high of 10%. Another factor, according to Senior Director Steven Stubbs, is fiscal prudence by consumers.
'Consumers are clearly more reluctant to take on greater amounts of debt despite the labor market improvement,' said Stubbs. 'Wage growth is not keeping pace with the labor market improvement and there are still a high number of discouraged workers, which is also driving consumer consumption declines.'
Fitch anticipates total consumer bankruptcy filings for the year to come in 12%-13% below 2013 levels. Where this has also been a positive is in chargeoffs for prime credit card ABS, which are now 23% lower than this point in 2013 and 78% off the all-time high of 11.52% seen over four years ago (September 2009). This will serve as a boon for the already strong performance of most consumer asset classes.
Fitch's '2014 Consumer Bankruptcy Update' is available at 'www.fitchratings.com' or by clicking on the above link.
Additional information is available at 'www.fitchratings.com'.