28 Nov COTW: Private Credit: What We Are Watching
The chart below can be downloaded here.
During the prior economic expansion, the spread in wage growth between the 55+ age group & the 25-54 group was roughly 1%. Not only has this divergence continued in the current cycle, it has widened. Similar divergences can be seen in full-time vs. part-time workers & in wage growth across varying education levels. Further, while overall wage growth is relatively strong, it has recently dipped lower. We believe these growing divergences will create risks for sub-prime segments of the household credit markets in the next recession, even as overall household credit markets are far less stretched than the last cycle.
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