Why the Consumer Keeps Chugging Along

Questions about the health of the U.S. consumer have ticked up in recent weeks, with another tepid GDP reading on Friday and earnings reports from major credit-card lenders showing rising delinquencies. For some investors, those signals amplified concerns about the spending outlook at a time of soft wage growth, stalling car sales and a growing overhang of auto and student-loan debt.

But some key measures of consumer health show why many investors remain upbeat: Consumer leverage and monthly obligations remain far below the levels they reached on the eve of the 2007-09 recession.

Consumers have been cautious on revolving debt, such as credit cards and home-equity loans -- where they got hit hard during the recession. The mortgage market remains tight and homes are expensive (bigger down payments are required), which is keeping a lid on home-loan growth.

While consumer credit excluding mortgages is hitting new highs, reflecting the spike in student debt and auto loans since the crisis, total household leverage isn't rising and debt service ratios have fallen. The consumer picture isn't a uniformly happy one, but for now the outlook appears relatively upbeat.

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(END) Dow Jones Newswires

July 30, 2017 14:30 ET (18:30 GMT)