Post on 14-Sep-2014
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The state of U.S. business credit
Cris deRitis Moody’s Analytics
Joel Pruis Experian
#vision2014
Brian Ward Experian
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Our speakers
Cristian deRitis, PhD
Senior Director
Moody’s Analytics
Manages a team of economists focused on consumer credit modeling and analysis
Provides regular commentary to clients and the media on the state of consumer credit markets and small businesses
Has an interest in housing markets and housing policy and has written extensively on the future of the U.S. housing finance system
He received a Ph.D. and M.A. in Economics from Johns Hopkins University
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Our speakers
Joel Pruis
Senior Business Consultant
Experian Global Consulting Practice
Senior Business Consultant dedicated to delivering programs to his clients that increase productivity and profitability, provide financial services organizations with tools to gain a competitive edge
More than 25 years of experience in origination and portfolio management for small business and commercial credit
Bachelors in Accounting, MBA from Indiana Wesleyan University
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Our speakers
Brian D. Ward
Senior Director
Experian Business Information Services
Manages a team responsible for the strategic development and execution of all marketing including: awareness, demand generation, content creation and sales enablement
Deep background with big data organizations (Oracle, CA Technologies, Experian) that serve many industries
Holds a Master of Business Administration with an emphasis in management and a Bachelor of Arts in marketing from Santa Clara University
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Small business
economic outlook
Cris deRitis
Senior Director
Moody’s Analytics
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Growth to improve as government steps aside
-2
-1
0
1
2
3
'08 '09 '10 '11 '12 '13 14
Pe
rce
nt
Federal discretionary fiscal policy contribution to real GDP growth
Sequester Obamacare Bush taxes over $400k
Payroll tax & UI Recovery Act Other Spending
Cash for Clunkers Tax rebate checks Total Fiscal Policy
Stimulus
Austerity
Source: Moody’s Analytics
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0
1
2
3
4
5
6
7
-1.0
-0.5
0.0
0.5
1.0
1.5
Jan-13 Apr-13 Jul-13 Oct-13 Jan-14
Pe
rce
nt
Retail sales and food services
% change (L) % change yr ago (R)
Harsh winter weather hit retail hard
Sources: Census Bureau, Moody’s Analytics
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Despite setback, outlook calls for faster growth as …
0
1
2
3
4
5
10 11 12 13 14F 15F 16F
Pe
rce
nt
Real GDP and spending, annualized % change
Spending GDP
Sources: BEA, Moody’s Analytics
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15
20
25
30
35
9.5
10.0
10.5
11.0
11.5
12.0
12.5
13.0
13.5
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
Pe
rce
nt
Percentage of disposable income
Debt service (L) Adjustable Share of Liabilities (R )
… consumer debt burdens are low …
Sources: Federal Reserve, BEA, Moody’s Analytics
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2
3
4
5
6
7
8
9
01 02 03 04 05 06 07 08 09 10 11 12 13 14
Pe
rce
nt
Personal savings, percentage of disposable income, three months moving average
Savings rate 3-mo MA
… U.S. consumers are willing to spend …
Sources: BEA, Moody’s Analytics
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-4
-3
-2
-1
0
1
2
3
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Pe
rce
nt
Annual change in housing equity, $ trillion
… and wealth is rising
Sources: Federal Reserve, Moody’s Analytics
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-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
0.8
1.0
1.2
1.4
1.6
1.8
2.0
70 73 76 79 82 85 88 91 94 97 00 03 06 09 12 15F 18F 21F
Pe
rce
nt
Millions
Household formations (L)
20-34 year olds, change (R)
New household formations will drive activity …
Sources: Census Bureau, Moody’s Analytics
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… along with rising house prices
Sources: CoreLogic, Moody’s Analytics
Case-Shiller® Index, average,
annual growth, percentage – 2013Q4-2016Q4
2.1% to 3%
0% to 2%
5% >
3.1% to 5%
U.S.= 4.42
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Homebuilding to support small business growth
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Pe
rce
nt
Housing starts, million, seasonally adjusted annualized
Sources: Census Bureau, Moody’s Analytics
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Wages remain a restraint but …
-6
-4
-2
0
2
4
6
8
10
-5
-4
-3
-2
-1
0
1
2
3
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Pe
rce
nt
Three-month moving average, percentage change year ago
Employment (L) Wage income (R)
Sources: BEA, BLS, Moody’s Analytics
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… businesses are more upbeat …
-30
-20
-10
0
10
20
30
40
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13
Pe
rce
nt
Business confidence diffusion index
Source: Moody’s Analytics
The difference between the
percentage of responses to the
survey that are positive and the
percentage that are negative
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… and find credit is easy; filling openings is tough
-50
-40
-30
-20
-10
0
10
20
30
40
50
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Pe
rce
nt
Net percent of small business respondents reporting
% hard to fill job openings
% expecting real sales volume higher in 6 m
% reporting credit is harder
Sources: NFIB, Moody’s Analytics
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Regional credit trends
Joel J. Pruis
Senior business consultant
Experian global consulting practice
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Small Business Credit Index
Measures the overall condition of businesses with fewer than 100 employees
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Credit index flanked on both sides
9.2
9.4
9.6
9.8
10.0
10.2
10.4
10.6
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
13Q1 13Q2 13Q3 13Q4 14Q1
Firms with over 100 workers
Sources: Experian, Moody’s Analytics
Outstanding credit, percentage
change year ago (L)
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Delinquency trends
Source: Experian Business Information Map
5.00%
7.00%
9.00%
11.00%
13.00%
15.00%
17.00%
19.00%
21.00%
Q12013
Q22013
Q32013
Q42013
Q12014
West South Midwest Northeast Total
4.00
4.50
5.00
5.50
6.00
6.50
7.00
7.50
8.00
8.50
9.00
Q12013
Q22013
Q32013
Q42013
Q12014
Days beyond terms trend Bankruptcy rate trend
0.70%
0.80%
0.90%
1.00%
1.10%
1.20%
1.30%
1.40%
1.50%
Q12013
Q22013
Q32013
Q42013
Q12014
Delinquency trend
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Delinquency rate trend
Source: Business Information Map
Bottom-five industries
12%
14%
16%
18%
20%
22%
24%
26%
1 2 3 4 5
Transportation Public Services
Finance Communications
Construction
6%
8%
10%
12%
14%
16%
18%
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Health Services Hospitality
Agriculture Education Services
Business Services
Top-five industries
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App Volume Index (number of apps)
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Ind
ex t
o Q
4 2
01
2
All credit types
West South Midwest Northeast Total
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40%
50%
60%
70%
80%
Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
All credit types
West South Midwest Northeast Total
Approval percentages
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Average request size
75
100
125
150
175
200
225
250
Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Th
ou
sa
nd
s
All credit types
West South Midwest Northeast Total
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West vs. the rest
40%
50%
60%
70%
80%
Q4 2012Q1 2013Q2 2013Q3 2013Q4 2013Q1 2014
West South Midwest Northeast Total
5%
9%
13%
17%
21%
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Approval percentage Delinquency percentage
45%
55%
41%
59%
39%
61% 62%
38%
Line of Credit Term Loan
West Northeast South Midwest
Line of Credit vs. Term
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Business information
map
Brian D. Ward
Senior director
Experian business information services
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Do you heart
maps?
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Teacher turned realtor
Mother of two children
Permfantastic!
Meet my mother-in-law
*Please note: Names have been changed to ensure anonymity
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Pam C:
Sold one house in Las Flores that turned into 12 transactions in two years via word of mouth
Las Flores (at the time):
Newer, midsized homes
Nice family amenities
Close to the freeway
Near good schools
A bit of fortune!
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Buyer Seller Both
Prospect
Mapping for success
Acquire
Manage
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Police
News
Landscaping
Construction
Manufacturing
The same technique is used everywhere…
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What do they have in common?
Data: Visualization:
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It worked!
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Do you heart
maps…yet?
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Get it at no cost
Review it quarterly
Use it with ease
Gain a new perspective
View it now
The best part about this map…
experian.com/iBIM
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You should heart maps…
…so you can be like Pam C
Prospect
Acquire
Manage and
Collect
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Joel.Pruis@experian.com | @joelpruis
Brian.Ward@experian.com
@MarketingQuack | #IHeartMaps
Hear the latest from Vision 2014
in the Daily Roundup:
www.experian.com/vision/blog
@ExperianVision | #vision2014
Follow us on Twitter
For additional information, please contact:
Map: experian.com/iMap
Experian: experian.com/b2b
Moody’s Analytics: economy.com
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