Historically, we have a recession in the US every 5 to 7 years and on that basis, we’re due for the next one now. The economic cycle has come full circle and signs of contraction are starting to pop up.
Over the last month, I have shared at least four articles on social media describing trends that are troublesome to those of us who are trying to grow our business. Here’s a summary recap for your reading pleasure. Please give me your comments, I’d really like to hear your thoughts and observations.
Car loans now top $1 trillion as delinquency rates rise
DETROIT — Americans are borrowing more than ever for new and used vehicles, and 30- and 60-day delinquency rates rose in the second quarter, according to the automotive arm of one of the nation’s largest credit bureaus.
The total balance of all outstanding auto loans reached $1.027 trillion between April 1 and June 30, the second consecutive quarter that it surpassed the $1-trillion mark, reports Experian Automotive.
Small Business Defaults Rise, Borrowing Drops: “What Scares Us Is The Rise In Delinquencies”
Yesterday, we pointed out something disturbing when we looked at the latest NACM Credit Manager Index report: over the past year it had declined steadily, hitting the lowest print since 2009, or as the National association of Credit Managers’ economist Chris Kuehl said “Overall, it was fun while it lasted – the trends had been up and now they aren’t” adding that “the best that can be said about the decline is that it was bad and hasn’t gotten much worse…. The sales collapse is consistent with what has been appearing in the Purchasing Managers’ Index and other statistics, so it is unlikely to be an anomaly, not good timing as far as the retail community is concerned.”
As Heavy-Truck Sales Go, So Goes the Economy
By David Ader – For most people, the economy’s ups and downs are best measured by famous indicators like monthly job reports and quarterly releases of gross domestic product. But students of the arcane took special notice earlier this month when the Bureau of Economic Analysis released some disturbing data that didn’t make anybody’s front page. In August, domestic heavy-truck sales fell 29 percent from the same period of 2015, the weakest month in well over three years.
The last post was a graph by the St. Louis Fed showing the inverting of the yield curve on various securities. Whenever this happens, a recession always follows. Click here for the chart.
I hope this is helpful information for you in running your business.
Optimism about the economy’s recent performance seems to point to resilient consumer spending. The problem is that so much of the pre-2008 growth was credit driven. Warning signs about growth in debt, especially consumer debt, and especially about rising delinquencies should not be overlooked. That Americans are “borrowing more than ever” for vehicles and that 30 and 60 day delinquencies are rising should raise concerns about what little economic growth we’re actually seeing.