Consumer ABS sectors, including autos and credit cards, have shown comparatively good credit performance throughout the recession and during the subsequent period of "lethargic recovery." This is an indication of the U.S. consumer's resilience when faced with a weak economy. It also demonstrates the timely efforts by asset originators to manage risk during the downturn, according to a report published today by Kroll Bond Rating Agency (KBRA).
Since 3Q08, consumer debt levels and leverage have dropped, which improved the overall profile of the consumer’s balance sheets. But, considerable concerns still exist, the rating agency said. While unemployment is dipping and income is increasing slowly, the risk of another economic downturn is still high, specially considering the uncertainty surrounding the resolution of U.S. and European fiscal issues.