Did the economic predictions for this year come true? And what economic themes will shape 2024? In episode 36 of the Market Pulse podcast, we bring together our panel of experts from the Equifax Risk Advisors Group, including Dave Sojka, Maria Urtubey, Tom O'Neill, and Thomas Aliff to reflect on the economic trends that shaped 2023 and offer insights into what might lie ahead in 2024.

Revisiting Economic Trends 

One of the major themes that deviated from predictions is inflation. Initially expected to be transitory, inflation has proven more persistent, impacting businesses and consumers alike. It has impacted everything from everyday purchases to business operations. This unpredictability has certainly been a curveball for businesses trying to navigate these economic waters.

Additionally, the stability of the U.S. consumer was a surprise. Contrary to fears of a significant pullback in spending, consumers have demonstrated resilience, contributing to a more robust economy than anticipated.

"Consumer spending has been a driving force in 2023, defying early projections. It's a testament to the adaptability and resilience of the U.S. consumer in the face of economic uncertainties," said Tom O’Neill

Another unexpected success story is the labor market. Despite concerns of a slowdown, job market stability has been a pillar supporting economic growth.

"The labor market has been a bright spot, showcasing unexpected strength. This has contributed to increased consumer confidence and spending, fueling the economic engine," said Dave Sojka.

Auto Sector Insights

The auto sector experienced its own economic success and challenges. The auto sector has grappled with challenges such as high-interest rates and supply chain disruptions. While these factors have impacted demand and prices, the surprising resilience of the labor market has offset some of these challenges, said Tom Aliff.

“I would say the market within the subprime auto sector is where delinquencies have really been happening the most. There's been an extension of terms. So, a lot of things we’re observing are about what we expected, but there's going to be continued pressure with respect to auto payments rising,” he said.

Banking and Credit Space

Maria Urtubey shed light on unexpected developments in the federal student loan space.

The end of the moratorium and the Supreme Court's decision on loan forgiveness have injected uncertainty into the federal student loan landscape.

“We anticipate a rise in strategic defaulters as consumers grapple with the changing dynamics of student loan repayment," Urtubey said.

Credit Unions

Tom O'Neill emphasized the impact of interest rates and technological advancements in credit unions.

"Credit unions have faced challenges with interest rate predictions and staffing issues. Looking ahead to 2024, we anticipate a transformative year for credit unions, with artificial intelligence emerging as a crucial player," he said.

FinTech and BNPL Landscape

Our FinTech expert, Dave Sojka, discussed the regulatory landscape for Buy Now, Pay Later (BNPL) services.

"Regulatory guidance for BNPL services has been notably absent in 2023. We anticipate increased scrutiny in the U.S., following global trends in Australia and the UK. Regulatory compliance is set to become a central concern for FinTechs in 2024."

Looking Ahead to 2024

As we wrapped up our discussion, our experts shared their thoughts on key themes to watch in 2024.

Aliff: "The auto sector will need to carefully manage the aftermath of the boom in auto originations, addressing potential challenges in portfolio reviews."

Urtbey: "We anticipate a shift in the distribution of payers and non-payers in the student loan space, driven by uncertainties in income-driven repayment plans."

O'Neill: "Artificial intelligence is set to play an increasingly pivotal role for credit unions, offering transformative opportunities in 2024."

Sojka: "Regulatory compliance will take center stage for FinTechs as they navigate an evolving landscape."

More Risk Advisory Podcasts to Come

We want to express our sincere appreciation for our listeners’ continued support. The economic landscape is ever-changing, and we're committed to providing you with insights to navigate these uncertainties. We wish you a wonderful holiday season and look forward to bringing you more thought-provoking discussions in 2024.