Car loan delinquencies may be canaries in the coal mine

Wednesday February 20, 2019

The number of auto loan delinquencies at the end of 2018 represents 1 million more than at the height of the recession in 2010.
There are reasons to remain calm. The amount of automotive credit has grown significantly since the Great Recession, and although delinquencies volumes are high, the delinquency rate remains relatively modest.
Although the U.S. economy remains strong today, there are many signals and indicators pointing to a downturn sometime in the near future. Historically, changes in auto sales tend to proceed changes in the economy, and elevated delinquencies could be an early canary in the coal mine.

Feb. 20, 2019 — Charlie Chesbrough, senior economist for Cox Automotive, writes an opinion piece in The Hill. In the Federal Reserve Bank of New York’s latest report on household credit, we see that at the end of 2018, over 7 million Americans were 90 days or more delinquent on their monthly auto loan payments. Even worse: That number represents 1 million more delinquencies than at the height of the recession in 2010.

But should we really be concerned? Are rising auto loan delinquencies a signal of an underlying weakness in the U.S. economy?

@CoxAutomotive