What Happens to Consumer Discretionary (XLY) When Credit Card Delinquencies Spike?
What happens when credit card delinquencies spike? Consumer stress, retail impact, and bank earnings implications.
How Consumer Discretionary (XLY) Responds
Scenario Background
Credit card delinquency rates measure the percentage of credit card balances past due 30+ days. Rising delinquencies signal consumer financial stress and typically accompany rising unemployment, declining real income, or the expiration of pandemic-era support programs. The threshold above 3.5% has historically been associated with meaningful consumer distress.
Read full scenario analysis →Historical Context
US credit card delinquency peaked at 6.8% in 2009, troughed at 2.1% in 2021 (stimulus-boosted), and has been rising since 2022 from 1.6% (subset measure) through 3%+ by 2024. The 1990-91 recession saw delinquencies reach 5.5%. The 2020 COVID shock saw delinquencies decline due to stimulus payments and forbearance programs, an unusual pattern. Current levels, while below crisis peaks, are elevated relative to the 2014-2021 period.
What to Watch For
- •Credit card delinquencies above 4%
- •Auto loan delinquencies rising
- •Subprime auto stress signals
- •Credit card charge-off rates rising above 4%
- •Bank consumer loan loss provisions rising
Other Assets When Credit Card Delinquencies Spike
Other Scenarios Affecting Consumer Discretionary (XLY)
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