More U.S. consumers default on payments as economy weakens

WASHINGTON (Reuters) – Consumers are starting to default on credit cards and loans as the economy weakens, executives at several of the largest U.S. banks said, though they say delinquency levels remain modest. Profits at Bank of America, JPMorgan, Wells Fargo and Citigroup all beat analysts’ expectations, as lending giants reaped a windfall from higher interest rates. But those in the industry warn that momentum will fade this year as a recession looms and customer delinquencies climb. UBS analysts led by Erika Najarian predict that deteriorating economic conditions will lead to “deteriorating credit (environment) throughout 2023 and 2024, with losses eventually surpassing pre-pandemic levels given the looming recession”. However, they said loan defaults were expected to remain “below levels seen during previous downturns”.