Credit delinquencies expected to remain tied to unemployment

09.24.09
By Nicholas Storie

The economy may be showing signs of improvement, but that doesn't mean Americans' credit scores are getting any relief yet.

This week, Moody's Investors Service said that credit card write offs increased to 11.49 percent from 10.52 percent, while the number of credit balances overdue by 30 and 60 days also posted increases.

The credit card delinquency rate has risen steadily throughout the recession, and is likely to continue rising because many economists are warning that unemployment will remain high long after the recovery has set in.

Right now, the national unemployment rate stands at 9.7 percent, and many observers have predicted it will exceed 10 percent in the near future before it starts to head back downward. With so many Americans out of work and behind on credit debts, the number of delinquencies is equally likely to remain high in the short term.

Still, there may be some reason for optimism in the longer term when considering new figures from the Department of Labor which found that fewer Americans filed for first-time unemployment benefits last week.

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Credit delinquencies remain high in the U.S., along with unemployment.