Citing some deterioration in leading indicators of credit performance for U.S. households, Moody’s Ratings is now expecting consumer loan delinquencies to rise over the next 12 months. In a new report, the rating agency has downgraded its expectations for U.S. consumer credit performance in the face of higher inflation and signs of possible weakness in the labour market. While consumer loan performance has held up well so far this year in the face of negative economic headwinds — such as the U.S.-Iran war and its impact on global oil prices — certain forward-looking indicators are signalling rising credit stress. For instance, certain measures of unemployment and inflation-adjusted income “have weakened in recent months,” Moody’s noted. This is pressuring household savings and raises the prospect of interest rate hikes that would also weigh on household credit performance.