E1: Consumer Credit with Bob Jankowitz

Описание: In this episode, William Black and Bob Jankowitz discuss consumer credit and its impact on the economy. They explore the definition of consumer credit and its various categories, such as mortgages, credit cards, auto loans, and student loans. They also examine the current health of consumer credit, highlighting the paradoxical nature of the macroeconomic environment and consumer performance. They discuss the potential risks and vulnerabilities in the consumer credit market, including the impact of rising interest rates. They touch on the background and experiences of William Black, the sentiment of consumers in the current economic environment, and the issue of swipe fees. They also discuss the potential effects of new legislation on swipe fees and the role of rewards programs in the credit card industry.

Chapters

00:00 Introduction and Background
10:31 The Health of Consumer Credit
29:40 Assessing the Risks in Consumer Credit
38:40 The Impact of Rising Interest Rates
52:12 The Background and Experiences of William Black
01:12:09 The Complexities of Swipe Fees and Potential Impacts
01:20:39 The Uncertain Effects of Legislation on Swipe Fees

Takeaways

• Consumer credit is a significant part of the economy, with more than two-thirds of economic activity generated from consumer spending.
• The current state of consumer credit is paradoxical, with the macroeconomic environment showing strength while consumer performance in certain credit categories is deteriorating.
• There are several factors contributing to the challenges in consumer credit, including the impact of the pandemic, underwriting practices, and the financial resilience of different cohorts of borrowers.
• Understanding consumer credit is crucial for assessing the health of the economy and identifying potential risks and vulnerabilities.
• The potential impact of rising interest rates on consumer credit and the broader economy is a topic of concern and discussion.
• Consumers have experienced progressively lower interest rates, but the majority have never seen an environment of higher rates, which may limit their ability to navigate changes in the market.
• The consumer credit industry is complex and constantly evolving, requiring a deep understanding of various factors such as inflation, labor costs, and supply chain disruptions.
• While there have been efforts to reduce swipe fees, it is unlikely that consumers will directly benefit from these changes, as the savings may be captured by merchants or offset by other costs.
• The impact of legislation on swipe fees is uncertain, and unintended consequences may arise, such as changes to rewards programs or increased fees in other areas.
• Consumer sentiment plays a significant role in the economy, and factors such as inflation, rising costs, and riskier driving behavior can contribute to negative sentiment despite positive economic indicators.