Credit-Card Delinquencies Are Signaling a 2024 Recession

In the Nov. 15 issue of The Institutional View, I highlighted that the level of U.S. credit-card delinquencies overdue by 30+ days is signaling that a recession is on the horizon. So, too, are delinquencies overdue by 90+ days.

When the percentage of credit-card holders paying their outstanding balances late increases, it historically has foreshadowed an oncoming slowdown. As consumers’ balance sheets become stretched, they cut back on their spending. The cutbacks could be on discretionary items such as restaurants and travel, or essentials such as medicine or food.

The two charts below illustrate the issue.

The first chart is the percentage of credit-card payments that are at least 30 days overdue. With data from 2003, you can see that once credit-card delinquencies hurdled their downtrend in July 2007, it signaled that a recession was approaching–and it warned that the stock market was topping also.

When 30+ day delinquencies formed a double top and broke below support, it signaled that the economy would be improving–and it was a confirming bullish signal for the stock market.

The second chart of U.S. credit-card delinquencies overdue by 90+ days is a mirror image of the 30+ days overdue chart. It too illustrates that consumers are becoming stretched and are likely to be reducing their spending in the coming months.

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Therefore it’s not surprising that speculation is growing that the Federal Reserve has finished or is soon to finish its interest-rate tightening cycle. And that explains, too, why gold is nearing $2,000 an ounce again.

In my Nov. 1 column, I wrote that gold’s trend turned bullish when it hurdled $1,940. My work projects that bullion will test its $2,075 record high in the coming months. And once it has a monthly close above $2,100, my work projects a long-term advance to $3,500 or more.

Andrew Addison is the author of The Institutional View, a research service that focuses on technical analysis.

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