Equifax, Inc. · NYSE:EFX
Equifax — Market Pulse Webinar April 2024
51 slides from Equifax's conference presentation, Apr 18, 2024
Slide 1: Confronting and Conquering Commercial Challenges in the Current Landscape
Confronting and Conquering Commercial Challenges in the Current Landscape April 18, 2024 | 2PM ET
Slide 2: The opinions, estimates, and forecasts presented herein are for general information use only. This
The opinions, estimates, and forecasts presented herein are for general information use only. This material is based upon information that we consider to be reliable, but we do not represent that it is accurate or complete. No person should consider distribution of this material as making any repres
Slide 3: Macroeconomic Update, Credit Trends, Discussion, Q&A
Macroeconomic Update Credit Trends and Small Business Indices Discussion Q&A PROPRIETARY | 3
Slide 4: Presenters
Dr. Robert Wescott Jesse Hardin David Adams President Risk Advisory Practice Product Marketing Leader Keybridge Research, LLC Equifax Equifax PROPRIETARY | 4
Slide 5: Macroeconomic Update
Macroeconomic Update Dr. Robert Wescott Keybridge Research, LLC PROPRIETARY | 5
Slide 6: Macroeconomic Update
Macroeconomic Update PROPRIETARY | 6
Slide 7: GDP = C + I + G
What’s been driving U.S. growth over the past year? Consumers have been holding their own, but investment in structures and government spending have been driving growth the fastest. GDP = C + I + G Investment GDP Consumption Structures +3.1% +2.7% +16.9% Investment Investment Government Equipment Re
Slide 8: U.S. labor market remains historically strong
First the good news: the U.S. labor market remains historically strong. 25 of the 50 states have their lowest unemployment rates in history. Labor market disruptions from Covid seem finished. Historically Low Unemployment* Few Discouraged Workers* Low Initial Unemployment Claims** Headline unemploym
Slide 9: Unemployment below 4% for 26 straight months
In fact, unemployment has been below 4% for 26 straight months—the longest stretch since the 1960s. Labor participation rates (ages 25-54 years) are at all-time highs, driven by women. The Quits Rate is Stabilizing Labor Force Participation has Recovered Total quits as a percent of total employment,
Slide 10: Spending growth outpacing income growth; savings rate
However, consumer spending is a concern. Consumer spending has exceeded income growth in 6 of the past 9 months, which has caused the household saving rate to drop to nearly a 50-year low. Spending Growth is Outpacing Income Growth The Savings Rate is Near Record Lows Percentage point difference bet
Slide 11: Bankruptcy filings are rising
Adding to worries, bankruptcy filings are rising, especially for commercial businesses. Individual bankruptcies are also up, but not dramatically. Bankruptcies are Rising Bankruptcy filings by type, Y/Y percent change, 2024 Q1 50% +43% 40% Reasons cited: 30% “The higher cost of funds and interest ra
Slide 12: Inflation is not done yet
Also, inflation is not done yet. Although prices of goods are softening, Keybridge’s “Top 45 CPI Categories to Watch” index of service-sector inflation is not dropping, keeping the Fed on pause. Examples of Items in the Keybridge Change in Consumer Prices by Designation “Top 45 CPI Categories to Wat
Slide 13: Is greedflation really the problem?
Is “greedflation” really the problem some politicians are claiming? Corporate profits did jump after Covid, reflecting supply chain problems and stimulus checks, but recently they’ve been moderating. Corporate Profits Did Hit Record Highs During Covid Corporate profits before tax as % of GDP, withou
Slide 14: Corporate profits up across most sectors
Corporate profits are up across most business sectors over the past 3 years, with autos, transportation, and chemicals posting the biggest gains. Most Industries have Seen Profit Increases, but Some More than Others % change in quarterly profits from 2019Q4 to 2023Q4 300% 225% 150% 75% 0% Source: BE
Slide 15: 3 Themes Shaping the U.S. Industrial Sector in 2024
The U.S. industrial sector shows increasing bifurcation. Many sectors that boomed under Covid are languishing now, but some other sectors are seeing significant increases in industrial activity. 3 Themes Shaping the U.S. Industrial Sector in 2024 Post-Covid Shifts Boosts from Government Strong Techn
Slide 16: Data Centers Create Their Own Economic Ecosystems
Demand for data centers is off the charts, which is driving demand for steel structures, concrete, electrical equipment, electrical components, and utility-scale power and transmission lines. Data Centers Create Their Own Economic Ecosystems • Nearly $70 billion in announced data center investments
Slide 17: Optimism gap between large and small businesses
Worth noting: an “optimism” gap is opening up between large businesses and small businesses. In the past year, corporate profits are up 5.1%, but proprietor’s income is up just 3.1% (below inflation). Big Business Confidence is Rising (Business Roundtable) Small Business Optimism is Low (NFIB) CEO e
Slide 18: Looming Commercial Real Estate Risks
Looming Commercial Real Estate Risks 18
Slide 19: Office vacancy rates at record high
Work-from-home habits have driven office vacancy rates to a record high 19.6% in 2023 Q4*. Recently, commercial office buildings have sold for fractions of their pre-pandemic purchase value. Downtown DC Suburban Boston 2017 purchase price: $61.75 million 2018 purchase price: $43 million January 2024
Slide 20: CRE debt coming due and delinquencies
Commercial real estate loan delinquencies have not risen much yet. But this could change soon as more than $900 billion of debt comes due this year – 20% of all commercial real estate loans.* Commercial Real Estate Loan Delinquencies See a Slight Uptick** Delinquency rates on commercial real estate
Slide 21: CRE loans and small and medium-sized banks
While it is still too early to panic about the implications for the wider financial system, CRE loans represent about 1/3 of the asset base of small and medium-sized banks, presenting the biggest risks. Source: CNN, February 9, 2024.. PROPRIETARY | 21
Slide 22: Audience Poll
Audience Poll PROPRIETARY | 22
Slide 23: Consumer Credit Trends and Small Business Indices
Consumer Credit Trends and Small Business Indices Jesse Hardin Equifax PROPRIETARY | 23
Slide 24: First mortgage and auto originations
First Mortgage originations through December 2023 continue to be lower and have fallen below 2015 levels; Auto YTD originations decreased, and the subprime share has dropped from 2018-2020 levels and is lower YOY. First Mortgage Originations Auto Originations Total Credit Limits December YTD in $Tri
Slide 25: Bankcard originations
December 2023 YTD Bankcard $ limit originations continue to grow YOY; subprime share has declined since its high in 2021 (left), and # of new cards originated December YTD is lower than 2022(right) Bankcard $ Limit Originations Bankcard Unit Originations Total Credit Limits December YTD in $Billions
Slide 26: Private label originations
December 2023 YTD Private Label $ limit originations are down YOY; subprime share decreased, and number of new cards originated is at its lowest since 2020 (right). Private Label $ Limit Originations Private Label Unit Originations Total Credit Limits December YTD in $Billions, NSA Total # Private L
Slide 27: Unsecured personal loan originations
YTD through December 2023 Unsecured PL $ originations balances saw a steep decline; subprime share rose (left), and # of new loans originated December YTD is also down (right) Unsecured Personal Loan $ Balances Originations Unsecured Personal Loan Unit Originations Total Balances December YTD in $Bi
Slide 28: Home equity revolving originations
December 2023 Year to Date Home Equity Revolving $ limit (left) and unit (right) originations declined after a peak in 2022 (left), although they are higher than 2020-2021. Home Equity Revolving $ Limit Originations Home Equity Revolving Unit Originations Total Credit Limits December YTD in $Billion
Slide 29: Mortgage debt and non-mortgage debt
Mortgage Debt at $12.5T and increased; Non-Mortgage Debt decreased for the 2nd consecutive month Mortgage Debt Non-Mortgage Debt First Mortgage, Home Equity Lines and Loans; Auto, Bankcard and Private Label Credit Card, Student Loan, Other; Balances in $Trillions; NSA Balances in $Trillions; NSA $5.
Slide 30: Revolving and non-revolving debt
Revolving Debt in February 2024 is at its highest level; Non-Revolving Debt decreased again this month Revolving Debt Non-Revolving Debt Bankcard and Private Label Card; Auto, Student Loan, and Other; Balances in $Billions; NSA Balances in $Billions; NSA $1,200 $3,900 $1,150 $3,600 $1,100 $1,050 $3,
Slide 31: Credit limits and utilization rates
Utilization increased for Bankcard, Private Label Card and Home Equity Lines. Credit Limits have risen for the Bankcard as well as for Home Equity. Credit Limits and Utilization Rates Bankcard Private Label Card Revolving Home Equity Credit Limits in $ Trillions and Utilization Rate %; NSA Credit Li
Slide 32: Severe delinquency rates
Delinquencies on all of the products shown below rose MoM. Severe Delinquency Rates Percentage of Accounts and Balances, Excluding Severe Derogatory, NSA Auto Bankcard Private Label Card First Mortgage 60+ Delinquency Rate 60+ Delinquency Rate 60+ Delinquency Rate 90+ Delinquency Rate 3.0% 4.0% 6% 1
Slide 33: Equifax Commercial Main Street Lending Report
EquifaxCommercial Equifax Main Street Lending StrategicReport —Month Insights April 2024 Year A Closer Look at Equifax Data State and Industry Trends Key Takeaways • Nominal small business lending activity increased again in February, with the three-month moving average rising 1.2% from January and
Slide 34: State and industry trends
Equifax Commercial Equifax Main Street Strategic Lending Report —Month Insights April 2024 Year A Closer Look at Equifax Data Stateand State & Industry IndustryTrends Trends Regions at a Glance Industries at a Glance Eight states reached series-high levels of nominal lending activity in February, in
Slide 35: Audience Poll
Audience Poll PROPRIETARY | 35
Slide 36: Conquering Commercial Challenges
Conquering Commercial Challenges David Adams Matt Moddelmog Equifax PROPRIETARY | 36
Slide 37: Commercial Insights
Commercial Insights Delinquency and default Default rates rates both projected to above increase in pre-pandemic 2024 and 2025 levels • All six industry segments tracked on • Default rates are projected to a delinquency basis are up year- increase to 4.4% in 2024 and 5.5% in over-year 2025 • Transpo
Slide 38: 5M+ new businesses created every year
5M+ number of new businesses created every year since 2021. Source: Small Business Administration (Link to Article) PROPRIETARY | 38
Slide 39: 21% of small business owners started new businesses
21% Percentage of small business owners started new businesses. Source: Business.com Data (Link to Article) PROPRIETARY | 39
Slide 40: 60% of losses never recovered
60% estimated amount of losses to small businesses that are never recovered Source: Florida Atlantic (Link to Article) PROPRIETARY | 40
Slide 41: $200B+ stolen by fraudsters
$200B+ Is the estimated amount of funds stolen by fraudsters between 2020 and 2022 from federal aid Source: NBC News (Link to Article) PROPRIETARY | 41
Slide 42: Current default rate for small businesses
2.9% ± Current default rate for small businesses. Source: Equifax Small Business Indices (Link to Report) PROPRIETARY | 42
Slide 43: Actual and Predicted Default Rates
Actual and Predicted Default Rates FROM SBDFI AND ABSOLUTEPD® Source: Equifax, Small Business Indices, February 2024 PROPRIETARY | 43
Slide 44: The Front Line of Defense
The Front Line of Defense… …Evaluate business customers and suppliers No matter the current market, But you still need to know who you’re there’s always risk of duplicitous businesses… doing business with: Money laundering, corruption, and counter-terrorist financing are only a few of the potential
Slide 45: The appetite to lend to SMBs remains strong
The appetite to lend to SMBs remains strong . . . Making SMB credit intertwined 82% One-employee SMB with that of the owner Access to capital is critical, SMB fail rate due to 38% running out of capital even if the SMB has a thin credit file Indicating a substantial 2022 SBA loan amount $26B to SMBs
Slide 46: Tap into a holistic view of businesses
Tap into a holistic view of businesses Traditional and non-traditional business data is the bread and butter of making more informed decisions across the customer journey. ACCOUNT PROSPECTING MANAGEMENT 50-60% reduction in ORIGINATION $1.9M estimated revenue customer cost-per- growth in acquisition*
Slide 47: High-Impact Data
HIGH-IMPACT While multi-data solutions change the game, actionable DATA and accessible data wins the championship. EFFORTLESS ACCESS ACTIONABLE INTELLIGENCE OUTSTANDING DATASETS WHAT. Access data-driven WHAT insights in the format Data is converted into of your choosing. actionable solutions to info
Slide 48: Q&A
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Slide 49: Focus on Forward
Focus on Forward Turn insights into action ● All Equifax data and insights presented today come from the Equifax Consumer Credit Trends reports and the Main Street Lending Report, which are available at equifax.com/marketpulse ● Ensure you have the optimal tools to evaluate and verify customers and
Slide 50: Visit equifax.com/marketpulse
Visit equifax.com/marketpulse ● Register for the May 16 webinar ● Download our monthly Main Street Lending Report ● Download our U.S. National Consumer Credit Trends Reports Follow our Also check Equifax for out the Business podcast LinkedIn PROPRIETARY | 50
Slide 51: Market Pulse
Market Pulse