What slowdown? Californians’ unpaid bills hit record low

”Survey says” looks at various rankings and scorecards judging geographic locations while noting these grades are best seen as a mix of artful interpretation and data.

Buzz: Californians have yet to show serious problems paying their bills in this challenging economy, as late payments hit a record low at the end of 2022.

Source: My trusty spreadsheet reviewed the New York Fed’s quarterly tracking of consumer borrowing habits compiled from credit history by Equifax. The stats break out 11 heavily populated states, including California, dating to 2003.

Topline

Only 1% of California household debts were 90 days or tardier in the fourth quarter. That’s a remarkable resiliency following the Federal Reserve’s interest-rate hikes throughout most of 2022 designed to cool the pandemic era’s surprisingly robust economy.

So how low is California’s 1% delinquency rate?

The fourth quarter marked the best statewide payment pace on record and the lowest delinquency rate of the 11 big states tracked.

It’s significantly below the 1.61% of debts nationwide that are tardy and also the lowest since 2003. The highest delinquency among the 11 big states was found in Pennsylvania at 2.2%.

Consider California averaged 1.6% late payments in mid-pandemic 2020-21 and 1.9% in pre-pandemic 2018-19. Looking back over 21 years, 3.9% of California bills were paid late on average.

And here’s a reminder of the economic ugliness of the Great Recession: California’s 11.6% delinquency rate in 2009-10.

Details

Yes, Californians have lots of debt – $84,850 per capita at year-end 2022. That’s No. 1 among the 11 big states and 42% above the national $59,885 norm.

Still, California has few delinquent debts – $857 per capita, the third-smallest rate among the 11 states and 11% below the nation’s $964. The highest was in Texas at $1,172 while the lowest was in Michigan at $799.

Of course, most Californians’ debts are mortgages. Traditional home loans and home-equity borrowing ran $69,460 per capita statewide in the fourth quarter. No other big state has more housing debts, and it’s 60% above the nation’s $43,350 level.

Or look at this debt difference this way – 82% of California’s per capita borrowings are mortgages vs. 72% nationally.

But so far in this wild economy, the house payment is getting to the lender on time.

Only 0.64% of California’s home-loan dollars owed were 90 days late or more in 2022’s final quarter. That’s the best payment rate of the 11 big states and roughly one-third lower than the 1.03% national rate.

Note: Texas, with a 1.31% late-pay pace, had the most-tardy mortgages of the 11 big states.

Caveat

A recent borrowing binge hints that an inflationary bout not seen in four decades is pinching household finances.