(My new American Thinker post)
Are we going into a recession? I don’t know for sure, but “late” car payments may be a clue. In other words, more and more Americans are falling behind on their car loan obligations. This is from FOX Business:
A growing number of Americans are falling behind on their car payments, an ominous sign for the U.S. economy as high car prices and persistent inflation strain household budgets. Car repossessions tumbled in the early days of the pandemic when the government sent $5 trillion in stimulus money to American homes and businesses. But they have progressively ticked higher as sky-high prices for used and new cars alike forced consumers to take out bigger loans.
In January, the percentage of auto borrowers who were at least 60 days late on their bills climbed 2% from December and 20.4% from a year ago, according to the latest data from Cox Automotive. The percentage of severe delinquencies surged to the highest level since 2006. Although the high level of severe delinquencies has not led to equivalent growth in defaults, those are also on the rise: Loan defaults increased 6.2% over the course of January and were up 33.5% from a year ago.
It’s ugly and that’s the bottom line. More and more people just can’t pay their car loans. In the past, people have looked for a used car to continue driving. Unfortunately, the cost of a used vehicle is now prohibitive too. I’m not looking for a new car but I love looking at car ads. I’ve noticed lately that a lot of used cars with over 100,000 miles are rather common. That did not happen before.
Where do we go from here? I don’t know because getting around in North Texas requires a car, unless you work downtown and can take the train. The rest of us have to drive from A to B. I just don’t know how we will do that with these car prices or repossessions.
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