CARY, N.C. -

Contract extensions for auto financing are trending down. Consumer expectations for their household financial situations are improving. President Biden just signed the newest federal stimulus package.

As individuals and industries acknowledged the first anniversary of COVID-19, analysts and experts are seeing a wide array of positive trends; ones that might help your current portfolio and future paper.

Beginning first with S&P Global Ratings, analysts there discovered that January showed extensions on auto paper in public asset-backed securities (ABS) decreased significantly relative to December.

For the public prime pools that the firm tracks, the monthly average extension rate decreased 27 basis points to 0.46% from 0.73%. And for public subprime pools, it dropped 134 basis points to 3.50% from 4.84%.

“We attribute the substantial improvement to stimulus checks that were paid in January ($600 per individual and child),” S&P Global Ratings analysts said in a news release. “These checks helped ease the financial burdens for many, thereby reducing the need for extensions. Employment levels also improved during the month, with nonfarm payroll employment increasing by 166,000.”

Even with the tremendous reduction in extension rates, S&P Global Ratings pointed out that they remained elevated relative to pre-pandemic levels recorded last January.

In the prime segment, extensions were 15% higher (0.46% versus 0.40%), while for public subprime issuances, they were 75% higher (3.50% compared with 2.00%).

“However, performance differed greatly by issuer, with many granting fewer extensions this January compared with a year ago,” analysts said.

Furthermore, S&P Global Ratings indicated the average number of full payments that have been made on contracts since their first COVID-19-related extension continues to grow. In December, analysts said they started to track the number of full payments made on contacts extended since March.

Consumer sentiment improves

Arriving this week, too, the Federal Reserve Bank of New York’s Center for Microeconomic Data released its February Survey of Consumer Expectations, which showed sharp increases in year-ahead gas and rent price growth expectations.

However, other segments of the survey showed positive trends.

For example, after remaining flat at 2% for the past seven months, the survey showed median one-year-ahead expected earnings growth increased to 2.2% in February, driven by respondents with more than a high school education. The overall median remains well below its year-ago level of 2.6%.

Analysts said mean unemployment expectations — or the average probability that the U.S. unemployment rate will be higher one year from now — decreased from 40.2% in January to 39.1% in February, falling slightly below its trailing 12-month average of 39.7%.

Also of note, the survey perceptions of credit access compared to a year ago and expectations for year-ahead credit availability both were largely unchanged in February. And the average perceived probability of missing a minimum debt payment over the next three months decreased from 10.5% in January to 10.1% in February, according to the survey, remaining below its 2020 average of 11.4%.

More stimulus funds

After the House and Senate passed the American Rescue Plan, President Biden signed it into law on Thursday. White House press secretary Jennifer Psaki said on Thursday afternoon that some individuals could see direct deposits into bank accounts as soon as this weekend.

Here’s an overview from the White House about the direct payments in the American Rescue Plan:

— For households who have already filed their income tax return for 2020, the IRS will use that information to determine eligibility and size of payments.

— For households that haven’t yet filed for 2020, the IRS will review records from 2019 to determine eligibility and size of payment. That includes those who used the “non-filer portal” for previous rounds of payments.

— For tax returns with direct deposit or bank account information, the IRS will be able to send money electronically. For those households for which Treasury cannot determine a bank account, paper checks or debit cards will be sent.

The White House then offered what the American Rescue Plan means for a typical family of four — with parents making $75,000 a year combined, and with children in school ages 8 and 5:

— That family of four will soon be getting $5,600 in direct payments, $1,400 for each parent and child.

— Because of the expanded Child Tax Credit, they will also get $2,600 more in tax credits than before.

“That’s $8,200 more in the pockets of this family as they try to weather this storm — on top of additional money in this bill to reopen schools safely, get shots in arms faster, and help those who have lost their jobs through no fault of their own,” the White House said.

Upbeat GDP forecast

Fueled in part by that federal stimulus, the first quarterly UCLA Anderson Forecast of 2021 expects robust growth for the U.S.

Following the 3.5% decline in real GDP in 2020, the national forecast called for 6.3% growth in 2021, 4.6% growth in 2022 and 2.7% growth in 2023. Forecasters said these rates of growth are considerably higher than the 2.3% rate the country averaged during the recovery from the Great Recession between 2010 and 2019.

The forecast also sees real GDP surpassing its 2019 peak by the end of the second quarter of this year and to surpass the trend it was on prior to the pandemic in early 2022.

“For the economy, a waning pandemic combined with fiscal relief means a strong year of growth in 2021 — one of the strongest years of growth in the last 60 years — followed by sustained higher growth rates in 2022 and 2023,” UCLA Anderson senior economist Leo Feler said in a news release.

“We have embarked on a once-in-a-lifetime policy experiment to test the ability of government intervention to make even deadly pandemic-sized economic shocks a short blip in our economic history,” Feler continued, also  noting that governments around the world ensured a “vaccine race” by guaranteeing purchases and that U.S. policies helped keep businesses afloat and maintained employer-employee relationships.

“If the motto of the pandemic was to survive, the motto post-pandemic is to thrive, and because of the policies implemented to date, we’re in a position to have a rapid economic recovery,” he added.

“This all means we have the opportunity to test how much we can stimulate the economy and how rapidly employment can recover without overheating the economy,” Feler went on to say. “If real GDP goes above ‘potential GDP’ without generating sustained inflation, it will signal that we have been too modest in our assumptions about the productive potential of our economy … These next few years will help us discover if secular stagnation has been a myth we’ve mistakenly bought into and whether we have the capacity to grow much faster than we’ve done in decades.”