https://www.youtube.com/watch?v=01BgQn9x1pM
New signs of stress in the ballooning trillion-dollar U.S. auto market are pointing to an impending collapse as storm clouds continue to gather in the economic and financial landscape. Serious delinquencies in auto loans — defined as behind on payments by 90 days or more — jumped the most since the 2008-09 Global Financial Crisis, putting the entire automobile financing market at risk of facing a massive default wave in the coming months. Experts are raising big alarms about the current condition of the car loan sector. They say that millions of American motorists will have their vehicles taken away in the months ahead, and warn about a brewing financial crisis that could reach unprecedented proportions and completely crush the U.S. economy.
Newly “delinquent”, or overdue, U.S. auto loans reached $23 billion and new “seriously delinquent” loans exceeded $8 billion; both are absolute levels not seen since the depths of the global financial crisis, the report shows. Right now, more and more buyers are having difficulty keeping up with auto payments, and a record 7 million Americans are at risk of losing their vehicles for being 90 days or more behind on their loans.
In March, official agencies alerted about the strongest expectation of debt delinquency for people under 40 since the spring of 2020, when 14 million people lost their jobs during the first pandemic shutdowns. That has raised fears of a massive default wave this year because Americans are loaded up on auto loans like never before. At the end of 2022, the total value outstanding nationwide was $1.55 trillion, more than double the amount 10 years ago. Put another way, auto loan debt totaled $4,800 for every person in the country.
Every year, about 80 percent of defaults end in repossessions. But the truth is that the entire market is set up for failure. Some financial analysts even claim that many lenders are ignoring typical reg flags associated with loan applicants who are already struggling to pay their previous auto loan properly.
That is the argument Andrew Schmidt of the University of California, Berkeley, School of Law makes in a recent article. He says state officials, lawmakers, and regulators aren’t doing anything to intervene in the car credit market to curb lenders’ ability to issue subprime loans. Frequently, lenders price cars as high as twice the Kelley Blue Book value, a practice that allows them to “profit from the down payment and origination fees alone.” The subprime loans they issue also carry exorbitant interest rates—sometimes exceeding 30 percent.
While lenders profit from defaults, some borrowers spend decades paying off a car they only drove for a few months. To recoup loan balances, lenders engage in aggressive collections tactics such as lawsuits and wage garnishment. Some subprime lenders have attorneys on staff to keep up with the rapid rates of default.
But the heightened potential for mass debt default of subprime auto loans can send shockwaves through the financial system just like mortgages did in 2008, and Schmidt worries that this can have “disastrous consequences” for the economy. That’s why the auto market crash is likely to hit the poorest households hardest. “Without meaningful intervention, the subprime auto loan bubble is primed to burst,” Schmidt warns. Just like the other financial meltdowns that were fueled by reckless lending and speculation, this crisis will reach proportions most people don't even imagine. The dominoes are already falling in the financial world, and the automobile market may be the next shoe to drop
The cost of living in the United States has skyrocketed over the past few decades, putting a strain on the wallets of many Americans. Middle-class Americans, in particular, have been hard hit by stagnant wages, rising everyday expenses, as well as soaring health care and education costs. Many services that used to be a part of middle-class life are no longer affordable for our population, and many things that used to make our life easier and more enjoyable are now out of our reach.
For example, middle-class Americans would occasionally hire babysitters or housekeepers. In that way, they could enjoy their family time without being overwhelmed by household chores. But over the years, these services became way too expensive for this group, and that can be mainly attributed to stagnant wages. According to data from Care.com, the average cost of hiring a full-time nanny in the United States in 2022 was $16.50 per hour, and the average cost of hiring a full-time housekeeper was $18.50 per hour. At the same time, the median hourly wage of a middle-income worker is $23. In some states, that sum can go up $28.42, but still, with rising costs for housing, energy, food, gas, and pretty much everything we consume on a daily basis, they don't have much money left after paying their bills every month so that they can spend on the little things that make their lives a little bit easier.
Do you remember when our parents and grandparents would give us a few dollars to do the lawn? Those times don't come back. In the 2000s, middle-class families would spend about $20 on gardening and lawn care services. In 2023, however, homeowners are paying around $150 per visit. This cost typically includes mowing, edging, and trimming, as well as debris removal and basic fertilization and weed control. Additional services, such as aeration, seeding, and pest control, cost some extra. Almost a century ago, having a garden was something that saved our ancestors during the Great Depression, but that has become a luxury for the vast majority of us, not only because of the price to maintain it but also because of our lack of time to take care of it.
Eating healthy and consuming organic foods can be extremely beneficial for our bodies given that these products contain higher levels of nutrients and antioxidants, which can help boost the immune system and reduce the risk of chronic diseases such as cancer and heart disease. However, organic produce tends to be more expensive than conventionally grown produce, with some studies suggesting that organic produce can cost up to 50% more. Simultaneously, over 47% of middle-class Americans say they are struggling to keep up with rising prices of conventional foods, according to Pew Research Center data. So purchasing pesticide and chemicals-free foods is getting harder and harder for our average workers.
Life for middle-class Americans is turning increasingly gray as we lose access to the things that enable us to live fully and comfortably. Our burdens are getting bigger and our quality of life is getting lower. That’s what a broken society looks like. We are the ones who make this country run, and we surely deserve to be treated better. In today's video, we compiled products and services that have gotten way too expensive over time.
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