The surge in missed payments suggests that many households are experiencing financial distress akin to a recessionary environment, despite broader economic indicators.
In a chilling turn of events, serious delinquency rates for auto loans have skyrocketed to 2.8% in Q1 2024, the highest since the aftermath of the 2008 financial crisis. This surge paints a stark picture of financial distress among US households, with $45 billion of auto loans now perilously close to default.
As delinquencies climb, reaching levels not seen in over a decade, it’s clear that American consumers are facing mounting economic pressures. The $9 billion jump in auto loan balances to a record $1.62 trillion amplifies concerns over the sustainability of household debt levels.
What’s even more concerning is the parallel rise in car insurance costs, which surged by a staggering 22.6% in April alone, echoing inflation rates not witnessed since the 1970s. These dual pressures are squeezing household budgets, leading to missed loan payments at rates reminiscent of recessions past.
The implications are profound. From potential market disruptions and lender vulnerabilities to the broader impact on consumer spending and economic stability, the repercussions could reverberate throughout the economy. As households struggle to make ends meet, the specter of further economic hardship looms large.
BREAKING: Auto loan serious delinquency rates surged to 2.8% in Q1 2024, the highest level since 2010.
90+ day delinquencies have been rising a pace last seen during the 2008 financial crisis.
Auto loans held by US households jumped by $9 billion in Q1 to $1.62 trillion, an all… pic.twitter.com/iwQf4a5ulD
— The Kobeissi Letter (@KobeissiLetter) May 18, 2024
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