The Hangover of our Drunken Sailors

8.15.23 - The Hangover of our Drunken Sailors

Gold last traded at $1,902 an ounce. Silver at $22.52 an ounce.

Consumer Foreclosures, Bankruptcies, Delinquencies, and Collections: Checking on the Hangover of our Drunken Sailors- Wolf Street

Our Drunken Sailors have been out there spending money, and some of it comes from their surging income that has been outrunning inflation finally this year, and they're spending money from their investment gains and from surging interest income from CDs, money market funds, Treasury bills, and savings accounts. And some are spending money they've borrowed. And our Drunken Sailors have borrowed heavily in recent years to buy homes at fabulous prices. So now it's time to check in on them, to see how their credit is holding up under these conditions.

The number of consumers with foreclosures edged up to 38,840 in Q2, according to data from the New York Fed's Household Debt and Credit Report. But that was down by about 45% from the Good Times before the pandemic in 2017-2019, and down by 75% from the Good Times in 2003-2004 when the housing market was approaching the peak of the prior housing bubble.

The fiscal and monetary excesses during the pandemic, the forbearance programs, and outright foreclosure bans reduced foreclosures to near zero. And now there's the slow return to the Good Times normal. This combination is creating a lot of these frying-pan charts: