Danielle DiMartino Booth, Columnist

This Recovery Isn't All That Resilient

When adjusted for inflation, credit card usage has grown faster than incomes for 18 months.

July 21, 2017 at 11:00 AM UTC

Danielle DiMartino Booth, a former adviser to the president of the Dallas Fed, is the author of "Fed Up: An Insider's Take on Why the Federal Reserve Is Bad for America," and founder of Quill Intelligence.

Growing fast.
Photographer: Justin Sullivan/Getty Images

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Are Federal Reserve stress tests leading economic indicators? That certainly seems to be the case. Just ask Capital One Financial Corp.

As of the first quarter, credit card loss provisions at Capital One were above 5 percent, a six-year high. The company recorded some improvement for the second quarter, yet Fed stress tests of the bank’s overall loan portfolio in a deep downturn show losses topping 12 percent. That explains Capital One’s “conditional” passing score, a black eye that prompted a reduced share buyback plan and no increase in its dividend.