Q1-2 2023 economic outlook and recommendations for lenders

As we discussed in part one of our Q1-2 2023 Economic Outlook, the financial sector appears well-positioned for an economic downturn.

That being said, we are seeing the deterioration in delinquencies we have been forecasting.

Both banks and credit unions are seeing an uptick in delinquencies on 1-4 family mortgages and consumer loans (credit cards and autos). Banks are also seeing some deterioration in commercial real estate delinquencies.

While these levels are still nowhere near their pre-pandemic levels, it is clear consumers are struggling to keep up and we expect this to continue as long as inflation outpaces wage gains.

 

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