This is our 21st consecutive post predicting the Federal Reserve’s quarterly consumer loan charge off rate. To see the previous predictions, CLICK HERE.

The Federal Reserve Bank will soon report the Consumer Loan Charge-off Rate (CLCOR) for the third quarter of 2021. According to the data published on Aug 23rd 2021, the total seasonally adjusted CLCOR figure for the 2021Q2 was 1.22% with a significant drop from 2021Q1 figure, 1.54%. Pre-pandemic figures where averaging around 2.2% and 2.3% for more than two years which is one percentage point above the most recent announced number. In fact, only the first three quarters in this series, 1985Q1 to 1985Q3, were lower than the 2021Q2 figure.

The current most recent prediction for the upcoming report for 2021Q2 is 1.36%. However, given the increase in the volatility over the past year, the confidence of the model has decreased over that period as well. So, the decreasing trend could also be likely to continue, and it would not be farfetched if we see a number lower than 1.22% for 2021Q3.

Here are the predictions for the next four coming quarters:

Below, you can see the performance of our predictions against the actual values since 2015Q4 that we started predicting CLCOR on a regular basis.

CLICK HERE to see an interactive dashboard of our charge-off predictions on the RDS Tableau Public page.

To learn more about the RDS Business Intelligence team contact:

Kacey Rask : Vice-President, Portfolio Servicing

[email protected] / 513.489.8877, ext. 261