{"id":1478917,"date":"2024-07-23T17:45:00","date_gmt":"2024-07-23T21:45:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1478917"},"modified":"2024-07-23T17:45:00","modified_gmt":"2024-07-23T21:45:00","slug":"signs-of-severe-credit-card-and-auto-loan-stress-in-generation-z","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/signs-of-severe-credit-card-and-auto-loan-stress-in-generation-z\/1478917\/","title":{"rendered":"Signs Of Severe Credit-Card And Auto-Loan Stress In Generation Z"},"content":{"rendered":"

Signs Of Severe Credit-Card And Auto-Loan Stress In Generation Z<\/span><\/p>\n

\n

Authored by Mike Shedlock via MishTalk.com,<\/em><\/a><\/p>\n

The economy is slowing and that will hit the zoomers first and the hardest, especially renters…<\/strong><\/em><\/p>\n

<\/a><\/p>\n

Shaky Ground<\/strong><\/h2>\n

The idea for this post comes from the Wall Street Journal article\u00a0American Borrowers Are on Shakier Ground<\/a>.<\/p>\n

Years of higher inflation and interest rates have left consumers mired in debt, even as overall economy hums.<\/p>\n

I dispute the Journal\u2019s statement the \u201coverall economy hums\u201d.<\/p>\n

If the economy was humming we would not see charts like I am about to present.<\/strong><\/p>\n

Unexpected Expenses<\/strong><\/h2>\n

<\/a><\/p>\n

That chart is from the\u00a0Federal Reserve Report on the Economic Well-Being of U.S. Households<\/a><\/em><\/p>\n

The report was updated May 21, 2024 but it it only through 2023. Zoomers and younger Millennials are in trouble.<\/p>\n

Rot Starts at the Periphery<\/strong><\/h2>\n

The Wall Street Journal comments\u00a0Big Banks and Customers Continue to Feel Pressure From Higher Rates<\/a><\/p>\n

JPMorgan\u2019s second-quarter profit declined 9% year-over-year to $13.1 billion. That figure excludes one-time items, including a $7.9 billion gain on an exchange of the bank\u2019s shares of Visa.<\/p>\n

Credit-card loans rose faster than spending at all three banks, a sign that more borrowers carried over balances month to month.<\/p>\n

\u201cWhen you really dig into what\u2019s happening across different consumers, the folks on the lower end of the wealth or income spectrum are struggling more,\u201d Wells Fargo Chief Financial Officer Mike Santomassimo said on a call with reporters.<\/p>\n

JPMorgan\u2019s credit-card arm\u2014the biggest in the country\u2014said charge-offs on loans rose by nearly two-thirds from a year earlier.<\/em>\u00a0The rise in part reflected a normalization from years of historically low levels, Chief Financial Officer Jeremy Barnum told reporter<\/p>\n

JPMorgan CEO Jamie Dimon repeated his view that interest rates could wind up staying higher than some economists have forecast.<\/p>\n

\u201cMarket valuations and credit spreads seem to reflect a rather benign economic outlook,\u201d he said in prepared remarks. \u201cBut there are still multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world.<\/em>\u201d<\/p>\n

Auto Loans Plunging<\/strong><\/h2>\n

<\/a><\/p>\n

The above chart and the next few are from the New York Fed\u00a0Household Debt and Credit Report for 2024 Q1<\/a>.<\/p>\n

Are auto loans a sign of a humming economy? I think not.<\/p>\n

Transition into Serious 90+ Auto New York Fed Quarterly Report<\/strong><\/h2>\n

<\/a><\/p>\n

Transition into Serious 90+ Credit Cards New York Fed Quarterly Report<\/strong><\/h2>\n

<\/a><\/p>\n

Maxed Out Borrowers<\/strong><\/h2>\n

<\/a><\/p>\n

If you have maxed out your credit card there is about a 33 percent chance you are delinquent.<\/p>\n

Who might that be?<\/p>\n

Maxed Out Credit Card Users<\/strong><\/h2>\n

<\/a><\/p>\n

The preceding two charts are from the New York Fed report\u00a0Delinquency Is Increasingly in the Cards for Maxed\u2011Out Borrowers<\/a><\/p>\n

Notably Gen Z has the highest delinquency transition rate, but Millennials were the only group whose delinquency exceeded their pre-pandemic rate.<\/p>\n

Let\u2019s return to the first chart, repeated for convenience.<\/p>\n

Percentage of Consumers with Unpaid Bills by Homeownership Status<\/strong><\/h2>\n

<\/a><\/p>\n

Over 25 percent of those who rent have unpaid bills! Over 10 percent have not paid their water, gas, or electric bills.<\/em><\/p>\n

This isn\u2019t humming. It\u2019s the verge of disaster. And I have been talking about this setup all year.<\/p>\n

April 20:\u00a0People Who Rent Will Decide the 2024 Presidential Election<\/a><\/em><\/p>\n

May 31:\u00a0Why Consumers Are Angry About the Economy in Five Pictures<\/a><\/em><\/p>\n

June 19:\u00a0Why Angry Renters Will Decide the Election, Take II<\/a><\/em><\/p>\n

July 5:\u00a0The Unemployment Rate Bottomed a Year Ago, Who\u2019s Impacted the Most?<\/a><\/em><\/p>\n

Generational Homeownership Rates<\/strong><\/h2>\n

<\/a><\/p>\n

Home ownership rates courtesy of Apartment List<\/em><\/p>\n

The Fed does not see this freight train coming even though it is standing in the middle or the track facing the oncoming train. This is despite nearly all of the charts in this post are from Fed reports.<\/p>\n

And most economists are as blind as the Fed.<\/p>\n

Unemployment Rate by Age Group<\/strong><\/h2>\n

<\/a><\/p>\n

Candidate Preference by Age Group<\/strong><\/h2>\n

<\/a><\/p>\n

An amazing 41 percent of those 18-34 are for Trump with only 30 percent for Biden.<\/p>\n

That\u2019s an unprecedented 11 percentage point gap for Republicans. In 2020 this age group voted overwhelmingly for Biden.<\/p>\n

I discussed the above poll and also candidate preference by race in\u00a0Post-Debate USA Today-Suffolk Poll Has Grim News for President Biden<\/a><\/p>\n

Please click on link for 11 charts.<\/p>\n

So who are the renters that will decide the election?<\/p>\n

Zoomers, millennials, and black renters. They are priced out of a home while watching rent go up at least 0.4 percent every month for 33 months. That string finally snapped in June with a 0.3 percent rise.<\/p>\n

Biden Seeks Rent Controls<\/strong><\/h2>\n

On July 17, I noted\u00a0Biden Seeks Supreme Court Term Limits, Medical Debt Cancellation, Rent Controls<\/a><\/p>\n

Sorry Joe, it\u2019s too late. You are gone and a recession has started, not that rent controls had a chance. They are a terrible idea anyway, but desperation set in.<\/p>\n

A recession coupled with a weakening economy for the next three months is hard to overcome, especially given Kamala\u2019s political baggage.<\/p>\n

On July 8, I commented\u00a0Weak Data Says a Recession Has Already Started, Let\u2019s Now Discuss When<\/a><\/p>\n

Since then, more weak data hit the fan.<\/p>\n

I tie the economic picture together in\u00a0Three Top Reasons Mortgage Delinquencies Are Rising<\/a><\/p>\n

Rot starts at the periphery then spreads to the core. Panic is coming.<\/strong><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nTue, 07\/23\/2024 – 13:45<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/personal-finance\/signs-severe-credit-card-and-auto-loan-stress-generation-z<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

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