Vision 2014: The State of U.S. Business Credit

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The state of U.S. business credit

Cris deRitis Moody’s Analytics

Joel Pruis Experian

#vision2014

Brian Ward Experian

2 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.

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


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


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


Small business

economic outlook

Cris deRitis

Senior Director

Moody’s Analytics


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


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


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


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


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


-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


-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 …



… 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


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



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


… 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


… 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


Regional credit trends

Joel J. Pruis

Senior business consultant

Experian global consulting practice


Small Business Credit Index

Measures the overall condition of businesses with fewer than 100 employees


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)


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


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


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



40%

50%

60%

70%

80%

Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

All credit types


Approval percentages


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 vs. the rest

40%

50%

60%

70%

80%

Q4 2012Q1 2013Q2 2013Q3 2013Q4 2013Q1 2014


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


Business information

map

Brian D. Ward

Senior director

Experian business information services


Do you heart

maps?


Teacher turned realtor

Mother of two children

Permfantastic!

Meet my mother-in-law

*Please note: Names have been changed to ensure anonymity


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!


Buyer Seller Both

Prospect

Mapping for success

Acquire

Manage


Police

News

Landscaping

Construction

Manufacturing

The same technique is used everywhere…


What do they have in common?

Data: Visualization:


It worked!


Do you heart

maps…yet?


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The best part about this map…

experian.com/iBIM


You should heart maps…

…so you can be like Pam C

Prospect

Acquire

Manage and

Collect


[email protected] | @joelpruis

[email protected]

@MarketingQuack | #IHeartMaps

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For additional information, please contact:

Map: experian.com/iMap

Experian: experian.com/b2b

Moody’s Analytics: economy.com


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Vision 2014: The State of U.S. Business Credit

Economy & Finance

Transcript of Vision 2014: The State of U.S. Business Credit