NEW YORK -

While also visiting the popular topic of the presidential election, analysts from S&P Dow Jones Indices and Experian noticed auto loan defaults edged up slightly according to data through July. But defaults remained below the 1-percent level for the fourth consecutive month, mimicking a pattern that unfolded last summer.

The auto loan portion of the S&P/Experian Consumer Credit Default Indices released on Tuesday showed defaults on vehicle contracts recorded a 0.93 percent default rate in July, up 2 basis points from June. However, the rate has stayed below 1 percent since April.

A year ago, the auto loan default rate stayed below 1 percent from April through September.

Overall, the July composite rate — a comprehensive measure of changes in consumer credit defaults — came in at 0.83 percent in July, up 1 basis point from the previous month.

Analysts indicated the first mortgage default rate was 0.66 percent in July, up 1 basis point from the prior month. The bank card default rate came in at 2.92 percent, down 19 basis points compared to June.

S&P and Experian also mentioned four of the five major cities saw their overall default rates decrease during the month of July.

Chicago recorded a default rate of 0.89 percent, down 12 basis points for the month.

New York reported a default rate of 0.77 percent, down 6 basis points from June.

Dallas’ default rate decreased 5 basis points from the prior month, posting a default rate of 0.69 percent.

Los Angeles registered a default rate of 0.63 percent, down 4 basis points in July.

Meanwhile, Miami’s default rate increased for the fifth consecutive month, ticking up 6 basis points for a default rate of 1.37 percent.

“Consumer credit default rates remain close to 12-year lows amidst moderate growth in spending and incomes,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.

“The consumer economy is growing with few significant difficulties in accessing credit,” Blitzer continued. “Personal incomes rose 2.7 percent in the last year and retail sales, excluding autos, were up 2.3 percent in the year to July.

“Employment is increasing; median wage growth, as reported by the Atlanta Federal Reserve Bank, is 3.6 percent at annual rates; and consumer sentiment continues at high levels,” he went on to say. “Consumers' use of debt has expanded with both consumer credit and mortgage debt balances rising.”

In a separate commentary posted this past Friday, Stifel chief economist Lindsey Piegza elaborated about some of the data Blitzer mentioned, noting “retail sales were flat in July, significantly weaker than expected, according to Bloomberg.”

Piegza continued, “Last week, we wrote that while solid April to June, support from the consumer is likely to prove temporary against the backdrop of continued weak investment on the corporate side, stunting the job and income creation needed to support a strong consumer and trend growth in the remaining months of the year. 

“Temporarily supplemented by debt or an erosion of savings, the widening gap between income and consumption in Q2 tells a cautious tale for economic activity moving forward rather than an indication of future strength as some of the more hawkish (Federal Open Market Committee) members have suggested,” she also said.

Piegza went on to say that the “disappointing” retail sales report offered what she called the first indication of a decline in consumer momentum.

“Heading into the second half of the year, consumers are unlikely to be the solid support they were in Q2, removing or at the very least hindering one of the key sectors of strength for the economy. Without a marked turnaround in business investment, amid waning consumer activity, growth will remain lackluster for some time,” she said.

Turning back to Blitzer, he closed his default report commentary by touching on November’s presidential vote.

“This being an election year, and one when there will definitely be a new president next January, the economy faces more than the usual uncertainties,” Blitzer said. “With the electoral outcome unknown and large differences between the candidates' policy proposals, one should expect these uncertainties to cause some delays in business investments or consumer spending on big ticket items.

“Delays in spending are likely to limit the growth in consumer and corporate debt, avoiding substantial increases in default rates in the near term,” he added.

Jointly developed by S&P Indices and Experian, analysts reiterated the S&P/Experian Consumer Credit Default Indices are published monthly with the intent of accurately tracking the default experience of consumer balances in four key loan categories: auto, bankcard, first mortgage lien and second mortgage lien.

The indices are calculated based on data extracted from Experian’s consumer credit database. This database is populated with individual consumer loan and payment data submitted by lenders to Experian every month.

Experian’s base of data contributors includes leading banks and mortgage companies and covers approximately $11 trillion in outstanding loans sourced from 11,500 lenders.