According to the Federal Reserve’s survey of senior loan officers, the number of banks tightening their standards on consumer loans has fallen over the past year. This behavior certainly does not point to much concern about household loan performance. Moreover, one gets an even more positive message from the credit spreads on securities backed by auto loans and credit card receivables.
In recent months, the spreads between the yields on these securities and the swap rates of comparable maturities have narrowed across the credit spectrum. Thus far, I have focused on the liability side of the household balance sheet. There have been favorable developments on the asset side as well.