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In this Current Events Friday’s Post (CE-Friday’s), I’ll be letting you know just how concerned you should be about the fact that many millions of our country mates are over 90-days behind on their auto payments.
CE-Friday’s – “What you need to know today in less than 500 words”
Alert!! 7 Million Americans are Raising Their Hands to say, “Can’t Make Car Payment!”
I was listening to Marketplace last week when I heard the news that the number of people not making their car payments is on the rise. And whether you choose to lease or buy your car, this is troubling for us as an economy.
First the facts (from this source):
- Over 7 Million Americans were over 90 days behind on car payments in 2018 (New York Fed)
- That’s up about 16.5% compared with 2010
- More people are buying cars
- Household debt is up 21% compared with the post-recession mark in 2013
What does this mean on the large scale?
The overall “up” economy is leading folks to purchase more cars on credit, and as a result, more people are in danger of defaulting on these loans.
Translation: Economic confidence is high but these data indicate that confidence may be misplaced.
Whether it’s poor planning on the family-level or external factors negatively influencing the household budget – more people can’t afford the cars they drive today as compared with our country nearly a decade ago.
Worst case scenario:
An increasing number of Americans can’t make their car payments, those cars are repossessed, and people begin struggling to get to work, pick up their kids, and complete other everyday tasks our vehicles allow us to perform. Our economy suffers at an increasingly influenced rate until we find ourselves right back in another Great Recession with little hope for the short-term future.
Best case scenario
People care less about owning their vehicles these days as more of our country flocks coastal and into cities that offer public transportation and ride-sharing opportunities. This is an economic data point that, although true, has little effect on the current economic climate. Some cars are repossessed, many families are negatively impacted, but the fallout is contained because multiple transportation opportunities exist. …NBD…
What I think this indicator means:
I’m a 6.5 out of 10 on the concern-o-meter. I think that this data point alone may have a marginal effect on the economy as a whole. Facts are there are many other options for transportation these days.
However, when you couple this with the recent government shutdown, increasing calls for our next recession, and other economic concerns – I’m taking action.
We’ll be transitioning our family budget to start saving more rather than paying off debt. In addition, we’ll put off major business purchases until we’ve built up a bigger cushion in case we need to withstand an approaching economic downturn.
What about you?? Planning to take any action as a result of this (or other) news? Let us know in the comments below!
Thanks for reading!