Economic recovery hit an obstacle during the second quarter as delinquencies rose across eight loan sectors, including auto loans, credit cards and home equity, according to the American Bankers Association. The report reveals that loan delinquencies increased from 2.8 percent during the first quarter to 3 percent. Mobile homes and marine loans were the largest contributing factor to the increase. Despite the rise in the overall rate, credit card delinquencies dropped to its lowest level since 2001.
"The economic momentum over the last few quarters seems to be losing steam," ABA chief economist James Chessen said. "This will affect job creation and the ability of consumers to pay off debt. I think delinquencies will continue to improve but at a slower pace, reflecting a struggling economy."
Unemployment, which rose to 9.6 percent in August, remains an obstacle to economic recovery. More consumers are paring down their spending, hindering economic growth and making employers skittish about hiring new employees.
