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US consumer credit defaults rose in July, S&P study shows

Consumer credit defaults in the U.S. rose in July relative to the previous month, according to the S&P/Experian Consumer Credit Default Indices.

The July composite index stood at 0.85%, a 2-basis-point increase from June, as the indexes for first mortgage and auto loan default rates were both up from the previous month. Conversely, bank card default rates reported a 13-basis-point decrease. The index also tracks the default rates for New York, Chicago, Dallas, Los Angeles and Miami. All metropolitan statistical areas except for Miami posted higher default rates compared with the previous month.

Relative to a year ago, the July composite index was down by 1 basis point. The first mortgage default rate — 0.62% — and the auto loan default rate — 0.89% — were both down from their year-ago figures of 0.86% and 0.96%, respectively. July's 3.77% bank card default rate was up relative to July 2018's 3.56%.

Consumer credit defaults tend to be prominent during economic recessions. S&P Global Ratings said the risk of recession in the next 12 months has risen to a range of 30% to 35%, citing fewer leading economic indicators in positive territory, the inverted yield curve and the trade war as reasons that growth momentum may be fading.